TIDMNESF
RNS Number : 9008S
NextEnergy Solar Fund Limited
19 November 2021
LEI: 213800ZPHCBDDSQH5447
19 November 2021
NextEnergy Solar Fund Limited
("NESF" or the "Company")
Interim Results for the period ended 30 September 2021
NextEnergy Solar Fund, the specialist solar power renewable
energy investment company, is pleased to announce its interim
results for the period ended 30 September 2021.
Key highlights
-- +4.2p increase in Net Asset Value per ordinary share to
103.1p (31 March 2021: 98.9p), reflecting higher power curves and
higher market views of inflation
-- Diversification into the energy storage sector through a
GBP100m joint venture partnership with Eelpower, a leading UK
battery specialist, with first 50MW acquisition signed and being
prepared for construction
-- Commitment of $50m into NextPower III, a private
international solar fund, providing an opportunity to efficiently
access, inter alia, an established portfolio of operational and
in-construction international assets
-- Portfolio electricity generation +1.1% above budget for the period (2020: +11.1%)
-- Total dividends of 3.58p per ordinary share declared in
period (2020: 3.525p), the Company remains on track to deliver its
target dividend of 7.16p in respect of the year ended 31 March
2022
Financial highlights
-- Ordinary shareholders' NAV of GBP607m (2020: GBP584m)
-- Ordinary shareholder cumulative total return since IPO of 46.4% (2020: 41.5%)
-- Gearing (including preference shares) of 44% (2020: 41%)
-- Cash income GBP28.7m (2020: GBP32.5m)
-- Cash dividend cover before scrip 1.0x (2020: 1.2x)
Operational highlights
-- Increased total installed capacity by 10% to 895MW (31 March 2021: 814MW)
-- Added five solar assets increasing NESF operating solar assets to 99 (31 March 2021: 94)
-- Successfully energised South Lowfield, a 50MW solar asset with a long-term 15-year PPA
-- NEC's electricity sales desk continues to successfully manage
risk and opportunistically lock in high power prices in line with
NESF's electricity sales strategy; NESF's hedging positions
(covering 716MW of the UK portfolio) as at 15 November 2021
were:
o 2021/22: 96% of budgeted generation hedged
o 2022/23: 75% of budgeted generation hedged
o 2023/24: 59% of budgeted generation hedged
o 2024/25: 18% of budgeted generation hedged
Strategy update
-- Renewable infrastructure is a highly attractive asset class
which we continue to see a strong pipeline of opportunities for
growth. The current pipeline is in excess of GBP300m.
-- NESF continues to unlock growth by pursuing opportunities
within its investment policy limits:
o International solar assets (up to 30% GAV)
o Standalone energy storage (up to 10% GAV)
o Solar private investment structures (up to 15% GAV)
ESG highlights
-- NESF's portfolio generated 539GWh of electricity during the
period, which is the equivalent to:
o Powering 299,000 UK homes for a year
o Avoiding 229,000 tonnes of CO2e emissions
o Removing 151,260 petrol/diesel cars from the road
-- 30 Universal Biodiversity Management Plans ("UBMP")
implemented to improve local biodiversity on solar sites and
increase engage with the local community, going above and beyond
planning requirements
-- Achieved compliance with the European Union Sustainable Finance Disclosure Regulation
-- Committed to making disclosures in accordance with Regulation
("EU") 2019/2088 on sustainability-related disclosures in the
financial services sector
Results presentation
There will be a webcast and conference call this morning at
9.00am hosted by:
-- Michael Bonte-Friedheim (CEO - NextEnergy Capital, Investment Adviser)
-- Ross Grier (Managing Director - NextEnergy Capital, Investment Adviser)
To register for the webcast please use this link:
https://bit.ly/NESF_H1_webinar
The presentation will be followed by a Q&A session for
analysts. Questions may be submitted prior to the presentation via
email to ir@nextenergysolarfund.com or live during the event using
the webcast Q&A function. We will endeavour to answer submitted
questions during the Q&A section, if this is not possible due
to time constraints, we will follow up shortly after the
presentation.
A recording of the presentation will also be made available on
the NESF website after the event.
Kevin Lyon, Chairman of NextEnergy Solar Fund commented:
"The 2021 interim period has put UK energy at the forefront of
minds and agendas driven by unprecedented high-power prices in the
UK, global gas shortages, and the recent UN climate change
conference, COP26, highlighting the immediate need to switch to
renewable energy sources like solar.
I am pleased to report that the period has been successful for
NESF both financially and operationally. NESF has achieved some
important milestones in the period, taking its first significant
strategic step into the UK energy storage market by signing its
maiden 50MW standalone battery investment, signing a GBP100m joint
venture partnership with battery specialist Eelpower, and
committing US$50m to NextPower III, a specialist international
solar fund managed by NextEnergy Capital.
I am confident in NESF's ability to continue its growth momentum
and progressive dividend strategy, whilst maintaining operational
excellence going forward."
Michael Bonte-Friedheim, Group CEO of NextEnergy Capital
commented:
"NESF has navigated the interim period well and I am pleased to
report milestones which have not only improved NESF's current
portfolio but have also paved the way for more diversified growth
in the future. Financially, NESF remains in a positive position
with strong income as we remain on track to deliver our target
dividend of 7.16p for the financial year.
Following shareholder approval to increase our GAV outside of
the UK, we continue to develop a significant pipeline of
international solar assets, across North America, Portugal, Spain
and Italy, alongside UK energy storage assets.
I firmly believe the milestones hit during the period and our
growth prospects make NESF a unique investment proposition, as well
as one that is financially well-positioned to take advantage of the
host of future opportunities we see."
For further information:
NextEnergy Capital Group 020 3746 0700
Michael Bonte-Friedheim ir@nextenergysolarfund.com
Aldo Beolchini
Ross Grier
Peter Hamid (Investor Relations)
RBC Capital Markets 020 7653 4000
Matthew Coakes
Elizabeth Evans
Kathryn Deegan
Cenkos Securities 020 7397 8900
James King
William Talkington
Shore Capital (Sponsor) 020 7408 4090
Anita Ghanekar
Camarco 020 3781 8334
Owen Roberts
Eddie Livingstone-Learmonth
Apex Fund and Corporate Services (Guernsey)
Limited 01481 735 827
Nick Robilliard
Notes to Editors(1) :
About NextEnergy Solar Fund
NESF is a specialist solar power renewable energy investment
company listed on the premium segment of the London Stock Exchange
that invests in operating utility-scale solar power plants. The
Company may invest up to 30% of its gross asset value in non-UK
OECD countries, 15% in solar-focused private equity structures, and
10% in energy storage.
NESF currently has a diversified portfolio comprising 99
operating solar assets (primarily on agricultural, industrial, and
commercial sites), and a $50m commitment into NextPower III (a
private ESG solar infrastructure fund providing exposure to
operating and in-development international solar assets).
The NESF portfolio has a combined installed power capacity of
895MW (including NextPower III MW on an equivalent look-through
basis).
As at 30 September 2021, the Company had a gross asset value of
GBP1,087 million, being the aggregate of the net asset value of the
ordinary shares, the fair value of the preference shares and the
amount of NESF Group debt outstanding, and a net asset value of
GBP607million.
NESF's investment objective is to provide ordinary shareholders
with attractive risk-adjusted returns, principally in the form of
regular dividends, by investing in a diversified portfolio of
primarily UK-based solar energy infrastructure assets. The majority
of long-term cash flows from its investments are
inflation-linked.
For further information on NESF please visit
nextenergysolarfund.com
Commitment to ESG
NESF is committed to ESG principles and responsible investment
which make a meaningful contribution to reducing CO2 emissions
through the generation of clean solar power. NESF will only select
investments that meet the requirements of NEC Group's Sustainable
Investment Policy. Based on this policy, NESF benefits from NEC's
rigorous ESG due diligence on each investment. NESF is committed to
reporting on its ESG performance in accordance with the UN
Sustainable Development Goals framework and the EU Sustainable
Finance Disclosure Regulation.
NESF has been awarded the London Stock Exchange's Green Economy
Mark and has been designated a Guernsey Green Fund by the Guernsey
Financial Services Commission.
NESF's sustainability-related disclosures in the financial
services sector in accordance with Regulation (EU) 2019/2088 can be
accessed on the ESG section of both the NESF website (
nextenergysolarfund.com/esg/ ) & NEC Group website (
nextenergycapital.com/sustainability/transparency-and-reporting/
).
About NextEnergy Capital Group ("NEC Group")
NESF is managed by the NextEnergy Capital Group, a specialist
solar investment manager, which has a strong track record in
sourcing, acquiring, and managing operating solar assets. NEC Group
is a leading player in the global solar investment sector and has
over 200 team members with offices in UK, Italy, India, and the USA
and assets under management of over $2.9bn across three
institutional funds.
NextEnergy Capital Group donates at least 5% of its net annual
profits to NextEnergy Foundation. NextEnergy Foundation is an
international charity that was founded in 2016. Its mission is to
participate proactively in the global effort to reduce carbon
emissions, provide clean power sources in regions where they are
not yet available, and contribute to poverty alleviation.
For further information on NEC Group please visit
nextenergycapital.com
For further information on NextEnergy Foundation visit
nextenergyfoundation.org
About WiseEnergy
WiseEnergy is NEC Group's specialist operating asset management
division. NESF is differentiated by its access to WiseEnergy, which
has provided operating asset management, monitoring, technical due
diligence, and other services to over 1,300 utility-scale solar
power plants with an installed capacity in excess of 2.2GW.
For further information on Wise Energy please visit
wise-energy.com
([1]) Note: All financial data is unaudited as at 30 September
2021, being the latest date in respect of which NESF has published
financial information
Generating a more sustainable future
Annual Report for the six months ended 30 September 2021
Our Objectives
Investment Objectives
To provide ordinary shareholders with attractive risk-adjusted
returns, principally in the form of regular dividends, through a
diversified portfolio of solar energy infrastructure assets with
the addition of complementary technologies, such as energy
storage.
Strategic Objectives
Investment
Optimise the value of our assets through effective active
management.
Expand the portfolio in line with the Company's Investment
Policy to provide growth.
Operational
Consistently achieve operational outperformance of the portfolio
attributable to effective asset management.
Pursue continuous improvement in the management of operating
costs associated with the portfolio.
Environmental
Enhance biodiversity where our assets are located.
Contribute towards a zero carbon, sustainable future and help
mitigate climate change.
Social
Positively impact the local communities in which our solar
assets are located
Continue to engage with all stakeholders.
Governance
Act in a manner consistent with our values of integrity,
fairness and transparency.
Maintain strong and constructive relationships with our
shareholders and other key stakeholders.
Overview
Performance Highlights
Financial Highlights
NAV per ordinary share as at 30 September 2021 103.1p (31 March
2021: 98.9p)
Dividends per ordinary share for the period ended 30 September
2021 3.58p (30 September 2020: 3.53p)
NAV total return per ordinary share for the period ended 30
September 2021 7.9% (30 September 2020: 4.1%)
Ordinary shareholders' NAV as at 30 September 2021 GBP607m (31
March 2021: GBP581m)
Cash dividend cover (pre-scrip dividends) for the period ended
30 September 2021 1.0x (30 September 2020: 1.2x)
Ordinary shareholder total return for the period ended 30
September 2021 3.8% (30 September 2020: 3.9%)
Financial debt gearing as at 30 September 2021 26.0% (31 March
2021: 24.0%)
Total gearing as at 30 September 2021 44.2% (31 March 2021:
43.3%)
Ordinary shareholder annualised total return since IPO 6.2% (31
March 2021: 6.1%)
Operational Highlights
Total capacity installed as at 30 September 2021 895MW (31 March
2021: 814MW)
Operating solar assets as at 30 September 2021 99 (31 March
2021: 94)
Total electricity generation for the period ended 30 September
2021 539GWh (30 September 2020: 551GWh)
Generation above budget for the period ended 30 September 2021
1.1% (30 September 2020: 11.1%)
ESG Highlights
Tonnes of CO(2) e emissions avoided p.a. 229,000 (30 September
2020: 237,500)
Equivalent UK homes powered for one year 299,000 (30 September
2020: 306,8003)
NextEnergy Solar Fund Overview
A SOLAR POWER RENEWABLE ENERGY INVESTMENT COMPANY WITH A
DIVERSIFIED HIGH QUALITY PORTFOLIO, MANDATE FOR GROWTH AND A
DIVERSE PIPELINE OF NEW OPPORTUNITIES
MANAGED BY SOLAR SPECIALISTS:
NEXTENERGY CAPITAL, INVESTMENT MANAGER
WISEENERGY, OPERATING ASSET MANAGER
BOTH LEADING MANAGERS IN THE SOLAR ENERGY INFRASTRUCTURE
SECTOR
DIVERSIFIED PORTFOLIO:
99 OPERATING SOLAR PLANTS
1 INTERNATIONAL PRIVATE EQUITY SOLAR FUND INVESTMENT
NEW 100MW JOINT VENTURE PARTNERSHIP INTO UK STANDALONE ENERGY
STORAGE
IN THE INTERIM PERIOD WE GENERATED SUFFICIENT ENERGY TO POWER
THE EQUIVALENT OF 299,000 UK HOMES (EQUIVALENT TO EDINBURGH AND
BRIGHTON) ANNUALLY WITH CLEAN RENEWABLE ENERGY
CONTINUED ASSET OUTPERFORMANCE SINCE IPO
ATTRACTIVE INCOME, TARGETING A TOTAL DIVID OF 7.16P PER ORDINARY
SHARE IN RESPECT OF THE YEARING 31 MARCH 2022, PAYABLE
QUARTERLY
Why Invest in NESF & Solar Assets?
ABUNDANT CLEAN ENERGY SOURCE
More solar energy hits the Earth in a single hour than the
energy being used by the entire human population in a year.
Solar energy generation is now economically viable in markets
not typically characterised by high levels of solar irradiation
such as the UK.
RELIABLE INVESTMENT WITH ATTRACTIVE GROWTH PROSPECTS
Provides a regular attractive dividend for income seeking
investors.
Offers a natural hedge against inflation, for example government
subsidies are linked to RPI.
Large diversified operating asset portfolio and incremental
growth prospects.
PROVEN AND STABLE TECHNOLOGY
Reliable and predictable source of electricity due to high
consistency in yearly-solar irradiation.
Long useful life (25-40 years) with high proportion of
contracted cash flows from operating solar plants.
COST-EFFECTIVE ELECTRICITY GENERATION
Low costs of operations, maintenance and replacement of
assets.
Solar PV technology has benefited from a significant reduction
in costs and non-subsidised solar assets are now economically
competitive with fossil fuel sources and provide attractive
financial returns.
CLIMATE CHANGE SOLUTION
Fundamental to achieving a more sustainable future by
accelerating the transition to clean and sustainable energy.
Meaningful contribution to reducing CO(2) e emissions through
the generation of clean electricity.
Investment in solar provides significant biodiversity benefits
to the local surrounding areas.
Strategic Report
Chairman's Statement
The 2021 interim period has been one that has truly put UK
energy at the forefront of minds and agendas, and I am pleased to
say that it has been a successful period for NESF both financially
and operationally.
Earnings for the period were significantly above our previous
period at 7.74p per ordinary share, with our dividend target for
the current financial year at 7.16p per ordinary share remaining
unchanged.
Operationally NESF has met some important milestones with the
Group reaching its 150MW UK subsidy free development goal, as well
as committing to a significant investment in a private sector fund
which gives NESF diverse exposure to a large number of projects. In
another important strategic step, NESF entered into a joint venture
to establish its first standalone battery storage project in the
UK, which as well as being complimentary to our PV business, also
diversifies our income. With a significantly strengthened portfolio
I am confident in our ability to continue our financial growth and
operational excellence in the future.
I am pleased to present the NextEnergy Solar Fund (the "Company"
or "NESF") Interim Report for the six months ended 30 September
2021.
The period under review has witnessed continued global economic
challenges associated with the ongoing Covid-19 pandemic. In recent
months, power prices have reached unprecedented high levels across
both the UK and Europe, as countries recover from prolonged periods
of economic shutdown alongside global gas shortages.
Following the lifting of national lockdowns, the Company, its
Investment Manager, NextEnergy Capital, and its operating asset
manager, WiseEnergy, have all successfully transitioned to a hybrid
working model across its jurisdictions.
NESF's portfolio has demonstrated robust performance over the
period. This portfolio consistently generates more output than
budgeted, whilst we ensure the power price volatility is managed
through NESF's electricity sales hedging strategy. This allows NESF
to both reduce risk and take advantage of temporary higher forward
power prices.
NESF has the highest dividend yield when compared to relevant
peers. This presents investors, both current and new, with an
attractive opportunity to invest, particularly as we strategically
position NESF for its next stage of growth. NESF continues to play
a key part in contributing to tackling global climate change and
enhancing local biodiversity.
Results and Key Events
Operationally, the Company and its key providers have adjusted
to the challenges of the Covid-19 pandemic. The Company continued
to perform well, driven by the implementation of our portfolio and
asset management strategy, our approach to continually improve
operating efficiency and ability to manage our exposure to power
price fluctuations effectively through our specialist electricity
sales function. The Company's installed capacity has grown from
814MW as at 31 March 2021 to 895MW at the period-end.
The Company has now delivered on two of last year's Investment
Policy changes and is on track to deliver the third change of
achieving geographical diversity through investment into non-OECD
countries.
In September 2021, NESF entered the standalone battery storage
space by agreeing a GBP100m Joint Venture Partnership ("JVP") with
Eelpower Limited a leading battery storage specialist in the UK.
The JVP has already signed its first acquisition during the period
for a 50MW storage facility that is expected to be energised in
2022. The project is a ready-to-build standalone battery storage,
located in Scotland, which will provide additional stability and
flexibility to the grid. This investment has multiple revenue
opportunities such as arbitrage trading (battery dispatch and
re-optimisation using asset backed financial trades) and capacity
markets. The JVP includes a framework for future acquisition of up
to 250MW, enabling us to invest in opportunities that offer
complimentary revenue streams to our existing portfolio of solar
assets.
In June 2021, NESF announced a commitment of US$50m to NextPower
III LP ("NPIII""), a NextEnergy Capital managed private ESG solar
infrastructure fund that invests in solar assets primarily in OECD
countries. NPIII benefits from NextEnergy Capital's ability to
source and secure solar assets that deliver attractive
risk-adjusted target returns. This investment has enabled NESF to
benefit from access to a geographically well diversified portfolio
of operational, in construction and pre-construction solar assets
spread across the United States, India, Poland, Chile, Spain and
Portugal (on a look through equivalent basis, NESF owns 30MW of
these operational assets as at 30 September 2021). The commitment
also provides NESF with increased diversification across regulatory
regimes, technology providers and offtake counterparties. NESF's
investment manager, NextEnergy Capital, has agreed to rebate back
to NESF its full investment management fee relating to NESF's
commitment to NPIII, thereby providing a cost-effective investment
from NESF's perspective, due to the absence of fees-on-fees because
of the commonality of the investment manager.
Additionally, by investing in NPIII, NESF will benefit from
co-investment opportunities allowing NESF to take direct stakes in
solar PV assets alongside large international institutional
investors. This is particularly attractive as it will provide NESF
access to a diverse new pipeline of international assets in key
solar markets, providing a potential return enhancing portfolio
benefit (on a no-fee, no-carry basis).
In summer 2021, the Company energised South Lowfield (50MW),
located in North Yorkshire. The energisation represents a
significant milestone for NESF's strategy of establishing a
foothold in the long-term, high-credit UK corporate power price
agreements ("PPA") market. The Camden portfolio, comprising The
Grange (50MW) and South Lowfield (50MW), has a 15-year PPA in place
covering c.75% of the electricity to be generated over the next 15
years. The PPA counterparty is AB InBev, the world's largest
brewer. The portfolio also demonstrates the Company's ability to
establish itself as a leader in this subsidy-free space.
The remaining subsidy-free development assets, Hatherden (50MW)
and Whitecross (36MW), have been prepared for construction during
the period. Starting construction of Hatherden and Whitecross will
depend on the supply-chain environment. Once energised in FY
2022/23, our 150MW subsidy-free portfolio target will be achieved
(64MW has been energised at the date of this report). It is
estimated that the full subsidy-free portfolio will amount to a
total investment of c.GBP80m (7.4% of GAV as at 30 September
2021).
In addition to the Company's subsidy-free strategy, NESF has
agreed to finance, design, build, operate and own a portfolio of
solar assets on sites operated by the Anglian Water Group. The
power generated from these assets will be sold directly to Anglian
under a 25-year PPA. Two projects totalling 1.4MW are already
operational and a further 4MW are expected to be energised during
the current financial year.
The technical performance of our plants during the period has
been robust. Generation was 1.1% above budget, and would have been
2.6% above budget, if the high number of Distribution Network
Operator Outages ("DNOOs") (over which we have no control), were
excluded. With the majority of our electricity sold under
fixed-price contracts, we achieved earnings per ordinary share of
7.74p (30 September 2020: 4.04p).
For the financial year ending 31 March 2022, we are targeting a
total dividend of 7.16p per ordinary share. To the extent the Board
considers it appropriate, each year we will target increasing the
total annual dividend paid to ordinary shareholders. Following the
payment of the second approved interim dividend on 31 December
2021, the Company will have paid total dividends of 3.58p per
ordinary share in respect of the six months ended 30 September 2021
(30 September 2020: 3.525p).
NAV and Operating Results
At the year end, the ordinary shareholders' NAV was GBP607m,
equivalent to 103.1p per ordinary share (year ended 31 March 2021:
GBP581m, 98.9p per ordinary share).
The main contributors during the period were the increase in the
short-term power price forecast (+2.5p per ordinary share) on the
unhedged portion of our revenues and an increase in the short-term
inflation forecast (+1.8p per ordinary share).
Profit before tax was GBP45.5m (30 September 2020: GBP23.6m)
with earnings per ordinary share of 7.74p (30 September 2020:
4.04p). Cash dividend cover (pre-scrip dividends) was 1.0x (30
September 2020: 1.2x).
For the half year, the ordinary shareholder total return was
3.8% (30 September 2020: 3.9%) and the ordinary share NAV total
return was 7.9% (30 September 2020: 4.1%). As at 30 September 2021,
NESF had an annualised ordinary shareholder total return of 6.2%
(31 March 2021: 6.1%) and an annual ordinary share NAV total return
of 6.7% since IPO (31 March 2021: 6.0%). At the period end, the
NESF share price was 99.8p, which was a 3.3% discount to the NAV
per ordinary share of 103.1p.
Power Prices
During the period, extreme energy price volatility led to
dramatic increases in UK and European wholesale power prices. The
combined impact of low UK wind resource, reduced gas supply and
storage levels and outages at UK nuclear and interconnector
facilities resulted in the September 2021 UK day ahead auction
price monthly average reaching a record of GBP189/MWh.
Of the Company's revenues during the period, 59% were derived
from government subsidies and, at the end of the period, the
average remaining weighted life of the subsidies was 13.5
years.
The remaining 41% of the Company's revenues were derived from
selling the electricity generated to carefully selected
counterparties in the open market and, therefore, are exposed to
market power price movements until the price has been locked
(hedged). Our Asset Manager's electricity sales desk is focused on
securing the best terms for our electricity sales. This flexible
approach is designed to protect against adverse short-term price
movements whilst also enabling the Company to opportunistically
capture favourable market conditions by securing high fixed prices
for specified future time periods. Looking forward to the next
three financial years, as at 15 November 2021, the Company has
agreed pricing covering:
-- 96% of UK budgeted generation for the 2021/22 financial year;
-- 75% of UK budgeted generation for the 2022/23 financial year; and
-- 59% of UK budgeted generation for the 2023/24 financial year.
Portfolio Performance
Energy generated during the period was 539GWh (30 September
2020: 551GWh) and the portfolio achieved a generation
outperformance to budget of 1.1% (30 September 2020: 11.1%),
increasing revenues by an estimated GBP0.9m. Portfolio generation
was significantly impacted by DNOOs; without such DNOOs, portfolio
generation would have been c.2.6% above budget.
Distribution Network Operators ("DNOs") are regionally based
licensed companies (there are 6 across Great Britain) with each
responsible for a specific region. They own and operate the power
lines and infrastructure that connects consumers and embedded
generators to the power system and the national grid.
DNOs complete rolling programs of preventative maintenance and
upgrade works to ensure stability of the energy supplied to
consumers. In order to keep their staff safe they often have to
de-energise power lines to complete these works, as part of this
they have the right to ask generators such as NESF to isolate
certain assets for periods of time. The distributed nature of
NESF's assets does well to mitigate the impact of this in normal
years, however, during the coronavirus pandemic (2020) the DNOs
were not able to complete their periodic maintenance works and
therefore rolled these forward into 2021. This means that there has
been a concentration of the number of DNOOs within this period and
their impact on the portfolio, a trend which is not anticipated to
continue.
Nevertheless, our UK portfolio performed above expectations with
generation outperformance of 1.1% (30 September 2020: 11.5%) and
solar irradiation of 2.3% (30 September 2020: 11.2%). Our Italian
portfolio performed above expectations with generation
outperformance of 0.7% (30 September 2020: 4.6%) and solar
irradiation of 3.3% (30 September 2020: 4.2%).
Portfolio Update
During the period, our Investment Adviser and Asset Manager
continued to optimise portfolio returns and increase portfolio
diversification by:
-- energising projects with attractive long-term PPAs;
-- executing our electricity sales strategy to maximise revenue
and reduce shorter-term power price risk;
-- preparing the remaining subsidy-free portfolio (86MW) for construction;
-- securing a low-cost GBP75m Revolving Credit Facility ("RCF")
(plus accordion) to fund the investment pipeline (margin of 120bps
over SONIA ("Sterling Overnight Index Average"));
-- committing US$50m to an international solar private equity vehicle;
-- entering a GBP100m Battery Storage Joint Venture Partnership
and signing a first acquisition for a 50MW battery storage
asset;
-- implementing technical improvements across the portfolio; and
-- reducing operating costs through re-negotiating contractual
terms and entering into new agreements.
In line with its amended investment policy which was approved by
shareholders in September 2020, the Company is advancing a
significant pipeline of both domestic and international solar
assets, including co-investments in private equity structures and
domestic energy storage asset opportunities, which complement its
existing portfolio, with a view to achieving higher financial
returns, additional geographical, technology, and revenue
diversification.
Debt Strategy
In June 2021, the company secured a RCF of GBP100m (GBP75m
committed + GBP25m accordion option) with lenders NatWest and AIB.
This is held at the HoldCo Level. The Company was able to agree
attractive terms with a margin of 120bps over SONIA for the 3-year
duration of the facility.
As at 30 September 2021, the Company had GBP200m of preference
shares (31 March 2021: GBP200m). The Company's subsidiaries also
had financial debt outstanding of GBP283m (31 March 2021: GBP246m).
Of the financial debt, GBP190m represented two long-term fully
amortising debt facilities, GBP79m was drawn under two RCFs and
GBP14m was the look through debt in relation to the US$50m
commitment into NextPower III LP.
At the period end, the Company's subsidiaries had GBP86m undrawn
(excluding the accordion) from three RCFs and the Company had a
cash balance of GBP4.3m.
The total financial debt represented 26% of GAV as at 30
September 2021 (31 March 2021: 24%). At the same reporting date,
the total gearing comprising the total financial debt and the
preference shares represented 44% of GAV (31 March 2021: 43%).
Dividends
For the financial year ending 31 March 2022, we are targeting a
total dividend of 7.16p per ordinary share (2021: 7.05p).
The Directors have approved a second interim dividend of 1.79p
per ordinary share, which will be payable on 31 December 2021 to
ordinary shareholders on the register as at the close of business
on 19 November 2021. Following the payment of the second interim
dividend, the Company will have paid total dividends of 3.58p per
ordinary share in respect of the six months ended 30 September 2021
(30 September 2020: 3.525p)
The Company continues to offer a scrip dividend alternative as
approved by ordinary shareholders at the last AGM, details of which
can be found on the Company's website.
During the six months ended 30 September 2021, the Company paid
a total of GBP19.6m of cash dividends (30 September 2020: GBP18.7m)
and, in addition, issued GBP1.3m of scrip shares to ordinary
shareholders who elected for the scrip dividend alternative (30
September 2020: GBP1.6m), making a total of GBP20.9m of
distributions (30 September 2020: GBP20.3m).
The Company has paid dividends since IPO that have increased
annually in line with RPI, including the current financial year. To
the extent the Board considers it appropriate, we will each year
target increasing the total annual ordinary dividend paid to
shareholders. In deciding the total annual dividend, the Board will
take into account: projected future power prices and associated
price hedges, inflation in our markets, historic and budgeted
technical and operational performance of our portfolio; and the
appropriate ratio of ordinary earnings and cash cover to proposed
dividend payments.
Environmental, Social and Governance Matters
Our commitment to ESG is always at the forefront of our business
strategy and purpose. Our Investment Adviser is a signatory of the
United Nations' Principles for Responsible Investments and has
integrated ESG principles into all aspects of the NEC Group's
investment and asset management processes. NESF integrates ESG
factors in investment decision by implementing the Investment
adviser's Sustainable Investment Policy1 throughout the investment
cycle, from preliminary screening and exclusion to risk management
during pre-investment and ownership phase. We have strengthened our
transparency and reporting in compliance with the EU Sustainable
Finance Disclosure Regulation.
Aligned with our commitment to support the UK Government's net
zero ambitions presented at COP26, our portfolio during the six
months ended 30 September 2021 has generated 539 GWh of clean
electricity, contributing to avoiding the emission of 229,000
tonnes of CO(2) e. (30 September 2020: 237,500 tonnes CO(2) e) and
equivalent to power 299,000 UK homes for an entire year (30
September 2020: 306,800). This is roughly equivalent to powering a
city with 750,000 inhabitants (e.g. Edinburgh and Brighton
combined) or taking 151,260 cars off the road for an entire year
(30 September 2020: 170,500 cars).
Our Asset Manager also actively engages in activities that
enhance the environment and community surrounding our solar plants,
including, where feasible, on-site biodiversity activities such as
encouraging wildflower meadows, installing bug hotels, partnering
with local beekeepers and other initiatives to improve the local
biodiversity, as well as local community programmes.
The Company continues to hold the London Stock Exchange Green
Economy Mark, which recognises funds which derive 50% or more of
their revenues from environmental solutions, and the Guernsey Green
Fund Mark, due to our meaningful contribution to reducing CO(2) e
emissions through the generation of clean solar power.
NESF is currently compliant with the requirement of the EU
Sustainable Finance Disclosure Regulation ("SFDR"). The investment
adviser's ESG team have been working with an international law firm
who has supported NESF with the relevant disclosure obligations,
currently available on the Company website, in periodic reporting
and in pre-contractual disclosure documents. The law firm has also
confirmed that NESF classified under Art. 9 of the SFDR, because it
is a financial product, that is (partly or fully) marketed in the
EU and has sustainable investment as its objective. The funds'
sustainable investment objectives arise from their focus on
investments in solar PV and battery storage assets and their
investment decision making processes. In light of this
classification, in the future NEC will make the relevant
disclosures according to Annex III and V of the SFDR.
In addition to the ESG activities on behalf of NESF and other
clients, the NEC Group continues to donate at least 5% of its net
profits to the NextEnergy Foundation, which was established in
2017. The Foundation participates proactively in the global effort
to reduce carbon emissions, providing clean power sources in
regions where they are not available and contributing to poverty
alleviation.
Appreciation
On behalf of my fellow Directors, I would like to express my
sincere thanks to the numerous people who have worked in the field
and from home
We appreciate that conditions have been testing but the
continued hard work has enabled our Company to continue to operate
successfully during the Covid-19 pandemic.
Outlook
The Board, Investment Manager and Investment Adviser believe
that the market environment continues to be favourable for the
Company and its Investment Policy is appropriate for the market
conditions.
Undoubtedly, the Covid-19 pandemic continues to have a profound
impact on the sector in which the Company operates. The recent
power price surge during the period and beyond has the importance
of capturing the short-term higher power prices in the Company's
hedging strategy. The price for electricity is driven by several
factors that are inherently difficult to predict in the current
dynamic environment but is ultimately dependent on supply and
demand.
In the current economic climate, we are continuing to closely
monitor both macro and micro economic indicators and governmental
information to assess the potential future impact on the Company's
activities. The Company will continue to focus on generating
attractive financial returns for our shareholders, while having
positive social and environmental impacts.
NESF continues to consolidate its leadership position in the
growing UK long-term corporate PPA market, building upon the
successes of the Anglian Water projects and the landmark 100MW
Camden acquisition with PPA off taker ABInbev. This emerging PPA
market can provide long-term, reliable cashflows for the Company,
whilst supporting large corporates' energy needs through their
desire to consume renewable green energy and to help tackle climate
change.
NESF is progressing the Company's power price hedging strategies
for the sale of electricity from subsidy-free plants to secure
attractive risk-adjusted returns. The successful selection of our
150MW subsidy-free portfolio demonstrates our ability to respond
efficiently and effectively to a changing UK solar market through
our expertise in identifying opportunities and maximising
risk-adjusted returns.
NESF is advancing a diverse pipeline of international solar
investment opportunities, UK standalone battery storage assets, and
co-investment opportunities via its holding in NPIII. The
pipeline's goal is to complement the existing portfolio, diversify
some of our asset-specific/ market risks and enhance shareholder
returns.
NESF is aiming to extend the useful life of a further five
assets during the current financial year, adding to the 35 UK
assets (337MW) which have already secured extensions since IPO.
These extensions will be value accretive by increasing long-term
revenues.
ESG continues to be a core part of our purpose, as activities
mitigating climate change accelerate globally. The execution of our
ESG policy is not just integrated into NESF investment decisions,
it ensures we continue to lead by example and our Company and
stakeholders are fully aligned to create a better environment for
both current and future generations.
The Company has demonstrated that it can be resilient to the
volatility that the Covid-19 pandemic has posed, and we are well
placed to meet the challenge of achieving our investment objectives
and the opportunity to grow the business in the future in line with
our strategic goals.
Lastly, as demonstrated by the recent COP26 conference, the UK
is setting an example to the rest of the world on how economies can
change their energy mix to tackle climate change. The next six
months provide an exciting opportunity for NESF as it continues to
invest in both solar and energy storage. The Board and I strongly
believe that the fund is making a real difference to the UK energy
landscape and look forward to helping deliver both global net zero
goals and value to our shareholders.
Kevin Lyon,
Chairman
18 November 2021
NextEnergy Capital Group
NextEnergy Capital Group is a leading solar investment manager
and asset manager focused on the solar sector. The group is
responsible for the acquisition and management of the Company's
portfolio, including the sourcing and structuring of new
investments and advising on the Company's financing strategy. It
has c.$2.9bn of assets under management and employs over 200 people
worldwide.
About NextEnergy Capital Group
The Investment Manager, Investment Adviser and Asset Manager are
all members of the NextEnergy Capital Group (the "NEC Group"). The
NEC Group is privately owned and was founded in 2007. It has
evolved into a leading specialist investment and asset manager in
the solar energy infrastructure sector. Since it was founded, it
has been active in the development, construction ownership and
operating asset management of solar assets.
As at 30 September 2021, the NEC Group had assets under
management of c.$2.9bn with a cumulative operating generating
capacity of 1.4GW. In addition to NESF, it manages two private
equity funds, NextPower II [P (solar assets in Italy) and NextPower
III [P (solar assets globally). The NEC Group's team of over 200
individuals has significant experience in energy and infrastructure
transactions across multiple international jurisdictions.
The Investment Adviser's Investment Committee comprises Michael
Bonte-Friedheim, Aldo Beolchini, Giulia Guidi and Ross Grier, who
combined have in excess of 65 years' industry experience.
As at 30 September 2021, the NEC Group provides operating asset
management, monitoring, technical due diligence and other services
to over 1,300 utility-scale solar power plants with an installed
capacity in excess of 2.2GW. Its asset management clients include
renewable funds, banks, private equity funds and other specialist
investors. The Asset Manager has created a proprietary asset
management platform which integrates all technical, financial and
commercial data to analyse clients' data in real-time and generate
insight, all of which help to protect and enhance the long-term
quality and performance. The Asset Manager's software, systems and
specialist staff enable it to be at the forefront of the
"digitalisation of energy".
Aldo Beolchini is Managing Partner and Chief Investment Officer
of NextEnergy Capital and a member of the Investment Committee of
the Investment Adviser to NextEnergy Solar Fund.
Giulia Guidi is Head of ESG at NextEnergy Capital and a member
of the Committee of the Investment Adviser to NextEnergy Solar
Fund.
Ross Grier is UK Managing Director of NextEnergy Capital and a
member of the Investment Committee of the Investment Adviser to
NextEnergy Solar Fund.
Michael Bonte-Friedheim is Founding Partner and Group CEO of
NextEnergy Capital and member of the Investment Committee of the
Investment Adviser to NextEnergy Solar Fund.
Investment Adviser's Report
Introduction
As at 30 September 2021, the NAV per ordinary share was 103.1p
(31 March 2021: 98.9p). The increase in NAV over the last 6 months
reflects an increase in the short-term power price forecasts (+2.5p
per ordinary share) and a revision in short-term inflation
forecasts (+1.8p per ordinary share).
At the period end, the UK blended average power curve
corresponded to an average solar capture price of approximately
GBP71.1/MWh (31 March 2021: GBP45.6/MWh) for the period 2021-2025
and GBP44.1/MWh (31 March 2021: GBP46.5/MWh) for the period
2026-2040 (at 2021 prices).
As our employees return to the office, we continue to follow
government guidelines and monitor the impact of Covid-19 on our
global workforce, and the countries in which we operate and pursue
investment opportunities.
Portfolio Highlights
During the period, we continued to explore new opportunities in
different technologies, asset classes and geographies whilst
actively managing NESF's existing portfolio of operating solar
assets and development projects.
To progress its investment pipeline, the Company secured a new
RCF of GBP100m (GBP75m committed + GBP25m accordion) with a 3-year
duration in June 2021. The RCF was on attractive terms with lenders
NatWest and AIB with agreed margin of 120bps over SONIA. The
facility increased NESF's overall RCF capacity to GBP165m (not
including the GBP25m accordion).
In June 2021, NESF announced a commitment of US$50m to NextPower
III LP ("NPIII"), a private ESG solar infrastructure fund
established to invest in solar assets primarily in OECD countries.
The investment benefits from diversification across regulatory
regime, technology provider, offtake counterparty and geographic
location (with access to solar assets in the United States, India,
Portugal, Spain, Poland and Chile). As at 30 September 2021, NESF
had invested c.GBP20m into NPIII, adding 30MW to NESF's installed
capacity on a look-through equivalent basis based on its ownership
share of NPIII. NESF's investment in NPIII represents c.3.2% of
NESF's GAV as at 30 September 2021.
In June 2021, NESF energised South Lowfield, a 50MW subsidy free
asset in North Yorkshire. The asset is part of the Camden
acquisition of two projects totalling 100MW that was made in March
2021. The projects will produce enough clean energy combined to
power the equivalent of c.29,000 UK households per year. Both
assets benefit from a long-term 15-year PPA with AB InBev for c.75%
of the electricity generated.
In September 2021, NESF made its first strategic step into the
energy storage sector through a GBP100m Joint Venture Partnership
("JVP"), with Eelpower Limited, a leading battery storage
specialist in the UK. The JVP signed its first acquisition of a
50MW ready-to-build, standalone battery, located in Fife, Scotland,
which will provide additional stability to the grid via its export
capacity. It is expected to be energised and grid-connected in
2022. The JVP, owned 70% by NESF and 30% by Eelpower, also includes
a framework for the acquisition of up to 250MW (including this
initial 50MW project) of battery storage assets. The directors have
concluded that the JVP meets the control requirements of the
relative accounting standards and is therefore accounted for as a
subsidiary (see note 18). The Company is permitted to invest 10% of
its Gross Asset Value into standalone energy storage systems, an
investment mandate approved by shareholders in September 2020.
During the period, NESF also added four rooftop assets, as part
of an agreement made with the renewable energy developer, Zestec.
The four assets have a combined capacity of 0.7MW and are located
in Cheshire, Worcestershire, Oxfordshire and East Sussex. Two of
the assets will benefit from FiTs, whilst the remaining assets will
benefit from the Company's hedging strategy. This venture requires
small individual investments (typically GBP0.2m-GBP0.3m per
rooftop) but yields attractive risk-weighted financial returns. It
is also a good avenue to deploy cash flows generated by the
portfolio in excess of the dividend and operating cost base.
Portfolio Performance
During the period, the portfolio achieved a generation
outperformance to budget of 1.1% (30 September 2020: 11.1%),
increasing revenues by an estimated GBP0.9m. Portfolio generation
was significantly impacted by DNOOs; without such DNOOs, portfolio
generation would have been c.2.6% above budget.
DNOOs were driven by higher than normal grid maintenance
undertaken by DNOs during the period, primarily reflecting backlog
from the pandemic-impacted 2020/21 financial year and activities to
reinforce grid reliability.
Throughout the pandemic, workers in the electricity sector have
been considered "key workers" and this enabled the Asset Manager to
ensure that the technical and operational integrity of NESF's solar
assets was maintained and DNOOs impact was minimised as far as
possible.
During the period, irradiation across the entire portfolio was
2.4% above expectation (30 September 2020: 10.8%). Asset Management
Alpha for the period was -1.2% (30 September: 2020: 0.3%), and
would have been 0.2% (30 September 2020: 0.8%) if DNOOs were
excluded.
DNOOs significantly disrupted generation during the period,
reducing Asset Management Alpha by 1.4%. For illustrative purposes,
DNOOs reduced generation by 3.4% in September 2021, the largest
monthly impact since IPO, with at least two 5MW plants completely
taken off-line for the entire month.
Six months ended Irradiation Asset Management Generation (delta
30 September 2021 (delta vs budget) Alpha vs budget)
UK portfolio +2.3% -1.2% +1.1%
Italy portfolio +3.3% -2.6% +0.7%
Total +2.4% -1.2% +1.1%*
* the values do not cast due to rounding differences.
Irradiation Asset Generation
No. of assets (delta vs. Management (delta vs.
Six months ended 30 September monitored budget) Alpha(1) budget)
2015 17 +2.9% +2.8% +5.7%
2016 31 +0.0% +3.2% +3.2%
2017 41 +0.5% +1.5% +2.0%
2018 84 +8.4% -0.5% +7.9%
2019 85 +4.8% +0.2% +5.0%
2020 86 +10.8% +0.3% +11.1%
2021 88 +2.4% -1.2% +1.1%*
Cumulative from IPO to
September 2021 88 +2.9% +1.7% +4.6%*
*the values do not cast due to rounding differences.
1 For more information please see APMs.
Asset Management Alpha
The Asset Management Alpha is an important metric that allows
the Company to identify the "real" outperformance of the portfolio
due to effective asset management and excludes the effect of
variation in irradiation. The "nominal" outperformance is
calculated as the GWh generated by the portfolio versus the GWh
expected in the assumptions used at the time of acquisition. This
metric can be used for comparison with other peers in the solar
industry.
The Asset Manager monitors actual performance versus
expectations for assets operational for at least two months post
completion. The seven rooftop assets have been excluded as
irradiation is not monitored. Similarly, the generation performance
of assets that are yet to pass Preliminary Acceptance Certificate
("PAC") in accordance with the EPC contract is not reported by the
Asset Manager.
Current and Future Pipeline
The Company's current pipeline comprising a $50m commitment
($26.7m currently drawn) into NextPower III, a battery storage
Joint Venture Partnership with Eelpower Limited (GBP100m) and UK
solar investments provides strong momentum into the second half of
the financial year, where significant progress is being made in
executing additional dividend-enhancing acquisitions.
In line with the amended investment policy, the Company
continues to advance a significant pipeline of UK solar assets,
international solar assets, UK energy storage assets as well as
international solar co-investment opportunities through NESF's
commitment to NPIII.
These investment opportunities aim to achieve robust financial
returns, increase dividend cover, and add geographical,
technological, and revenue diversification to the NESF portfolio.
The Company envisage the future pipeline will be funded through a
mixture of drawdowns on existing RCF facilities and future equity
issuances.
Portfolio Optimisation
Asset life extensions
As at 30 September 2021, 35 UK assets (337MW), comprising c.37%
of the Company's portfolio, had secured 5, 10 or 15 year lease
extensions. We continue to work on extending the life of the
remaining assets and are targeting a further 5 assets for the
remainder of the current financial year to 31 March 2022.
For illustrative purposes, should the five targeted assets be
valued on a 40-year lease (assuming current lease terms), the
Company's NAV per ordinary share at 30 September 2021 would
increase by approximately 0.7p.
Asset optimisation
During the period, nine sites entered into new Operating and
Maintenance 'O&M' contracts. Eight of these contracts were
O&M replacements of which the Investment Adviser actively
negotiated a reduction in price achieving an average of
GBP5,300/MW. This resulted in an aggregate annualised cost savings
of c.GBP92,000 equivalent to a 27% reduction in contract price.
During the period, two insurance claims were closed by the Asset
Manager in relation to solar assets Saundercroft and Higher
Hatherleigh for a combined total settlement of c.GBP26,000.
Short/medium-term power purchase agreements
NESF continues to lock in tapered power price hedges over a
36-month period at levels above the independent market consultant's
predicted levels. This proactive risk mitigation helps secure and
underpin both dividend commitments and dividend cover, whilst
reducing volatility and increasing visibility of cash flows.
NEC's specialist energy trading desk, along with external energy
brokers, ensures that the Company's electricity sales strategy
maximises revenues whilst mitigating the negative impact of
short-term fluctuations in the power markets. Secured pricing
comprises of fixed price contracts, hedging under the trading
contracts and nine FiT sites opted into the export tariff.
UK hedging Summary(1) FY2021/ FY2022 FY2022/ FY2023 FY2023/FY2024
Budget generation
hedged (%) 96% 75% 59%
1 Covers 716 MW as at 15 November 2021
OFGEM audits
Since IPO, the majority of OFGEM audits have been successfully
signed-off without impacting ROC accreditations. NESF continues to
have regular audits and the NEC Group has experienced personnel who
deal with the ongoing audit. Professional advisers are engaged as
and when appropriate. During the period, no adjustments to the NAV
were made as a result of any completed or ongoing OFGEM audits.
Subsidy-free Portfolio
Starting in 2018, the Company sourced a pipeline of projects to
be developed into operating subsidy-free assets and set a target of
c. 150MW to add into its portfolio. As at 30 September 2021, the
Company had 64MW of operating subsidy-free assets. Following the
recent investment approval of Hatherden (50MW) and Whitecross
(36MW), the Company will have reached its 150MW target when the
assets are energised in the financial year 2022/23.
The Anglian Water projects (Sutterton and Marham) and the Camden
projects (The Grange and South Lowfield) are subsidy-free. However,
the energy generated will be sold directly to offtakers at a fixed
price for 25 and 15 years respectively. These assets therefore have
similar characteristics to subsidised assets and for that reason
are not included in the 150MW subsidy-free target.
The NEC Group's Head of Energy Sales is responsible for managing
the strategy for the sale of electricity from the subsidy-free
operating assets. Details on the power price risk management
strategy can be found below) to the Financial Statements.
The Italian Solis Portfolio
In December 2017 the Company acquired the portfolio of eight
operating solar plants with an installed capacity of 34.5MW located
in Italy for a total value of EUR131.9m (equivalent to GBP116.2m).
The portfolio represented c.11% of the Company's GAV as at 30
September 2021.
The key benefits of the Solis portfolio continue to be:
-- High risk-adjusted return: As at the 30 September 2021
valuation, the net IRR of the Solis portfolio was 8.2%.
-- Low risk-profile: The Company benefits from the portfolio's
operating history and the high quality of its components. In
addition, it reduces NESF's exposure to merchant energy markets, as
c. 85% of its revenues are fixed for 15 years following the
acquisition.
-- Positive contribution to dividend cover: The higher return on
investment is coupled with an attractive cashflow generation
profile, which is higher than ROC assets, and evenly spread over
the life of the investment, as the Italian FiT is fully fixed. For
the purposes of comparison, the Solis portfolio has a cash dividend
cover equivalent metric of 1.4x.
-- NAV accretion: As at 30 September 2021, the Solis portfolio
was valued on a DCF basis with a discount rate of 7.25% (31 March
2021: 7.25%) as a result of the increasing competition to acquire
solar PV assets in Italy.
-- Diversifying market risk: Italy is supported by a FiT
incentive mechanism. The FiT is granted by a state-owned company
which promotes and supports renewable energy in Italy, where the
sole shareholder is the Ministry of Economy and Finance. Tariffs
differ depending on the capacity, type of plant and the time of
commissioning which range between EUR195/ MWh to EUR318/MWh. Once a
PV plant is accredited, the FiT is granted over a period of 20
years and is not inflated.
-- Low revenue risk: Of the Solis portfolio revenues, c.85%
result from FiTs. The FiTs specific to this portfolio expire in
2031. The remaining 15% is from the sale of the brown electricity
fed into the grid at market price or via PPAs to other market
participants. With this revenue mix there is low revenue risk. In
addition, low operating costs result in stable EBITDA margins in
excess of 80%.
Portfolio Valuation
Introduction
The Investment Adviser carries out the fair market valuation of
the Company's underlying investment portfolio in line with its
accounting policies. The NAV is reviewed and approved by the
Investment Manager and the Board. The valuation is carried out
quarterly (ad hoc valuations may also be undertaken from time to
time, for example in conjunction with an equity fund raising).
The valuation principles used are based on a discounted cash
flow methodology. Assets not yet operational or where the
completion of the acquisition is not imminent at the time of
valuation use the acquisition cost as a proxy for fair value.
Additionally, the valuation includes the Company's investment into
NPIII on a look-through basis. The valuation of NPIII is based on
an estimated NAV at the respective quarter-end available at time of
preparing NESF's valuation.
The Board reviews the operating and financial assumptions used
in the valuation of the Company's underlying portfolio.
Portfolio valuation - key assumptions As at 30 September As at 30 September
2020 2020
UK long-term inflation (post
2030) 2.5% 3.0%
UK short-term inflation (1
year horizon) 4.8% 3.0%
Weighted average discount rate 6.3% 6.3%
Weighted average asset life 27.8 years 27.5 years
UK short-term power price average GBP71.1/MWh (real GBP45.6/MWh (real
(2021-2025) 2021) 2021)
UK long-term power price average GBP44.1/MWh (real GBP46.5/MWh (real
(2026-2040) 2021) 2021)
Italy power price average (20 EUR49.7/MWh (real EUR46.8/MWh (real
years) 2021) 2021)
UK corporation tax rate 19% until 2023, 19% until 2023,
25% thereafter 25% thereafter
Forecasted power price methodology
For the UK portfolio, we use multiple sources for UK power price
forecasts. At the short end (the next two years), where PPAs exist
we use the PPA prices that have been achieved, for periods where
there are no PPAs in place, we use the short-term market forward
prices. After year two we use a rolling blended average of three
leading independent energy market consultants' long-term central
case projections. This approach allows mitigation of any delay in
response from the Consultants in publishing periodic (quarterly) or
ad hoc updates following any significant market development.
For the Italian portfolio, a leading independent energy market
consultant's long-term projections are used to derive the power
curve adopted in the valuation.
The power price forecasts used also include a "solar capture"
discount which reflects the difference between the prices available
in the market in the daylight hours of operation of a solar plant
versus the baseload prices included in the power price estimates.
This solar capture discount is provided by the Consultants on the
basis of a typical load profile of a solar plant and is reviewed as
frequently as the baseload power price forecasts. The application
of such a discount results in a lower long-term price being assumed
for the energy generated by NESF's portfolio.
Historic - UK power prices
UK electricity day ahead prices increased from GBP57.0/MWh in
March 2021 to GBP189.1/MWh in September 2021.
Forecast UK power prices (real 2021)
The Company's current UK 20 year average power price forecast
represents an increase of 9.2% compared to that used at the end of
the previous financial period (and 44.3% below the average price
used at IPO).
Historic - Italian power prices
Italian electricity day ahead prices increased from EUR60.4/MWh
in March 2021 to EUR158.6/MWh in September 2021.
Forecast Italian power price (real 2021)
The Company's current Italian 20 year average power price
forecast represents an increase of 6.3% compared to that used at
the end of the previous financial period.
Discount rate
During the period, the Company has maintained the discount rate
for unlevered operating UK solar assets at 5.75% (31 March 2021:
5.75%).
In the context of high liquidity provided by international
investors, a maturing renewable energy market, a scarcity of
subsidised assets and the lack of any incentive framework for new
installations, the demand for operating solar assets remained
strong resulting in sustained upward pressure on prices in the last
six months. These changing dynamics were evidenced by the
experience of the Investment Adviser when bidding for solar assets
in the UK.
Discount rate assumptions Premium As at 30 September As at 31 March
2021 2021
UK unlevered - 5.75% 5.75%
UK levered 0.7-1.0% 6.45-6.75% 6.45-6.75%
Italy unlevered(1) 1.5% 7.25% 7.25%
Subsidy-free (uncontracted)(2) 1.0% 6.75% 6.75%
Life extensions(3) 1.0% 6.75-7.75% 6.75-7.75%
1 Unlevered discount rate for Italian operating assets implying
1.50% country risk premium.
2 Unlevered discount rate for subsidy-free uncontracted
operating assets implying 1.0% risk premium.
3 1.0% risk premium for cash flows after 30 years where leases have been extended.
The resulting weighted average discount rate for the Company's
portfolio was 6.3% (31 March 2021: 6.3%). The Company does not use
the weighted average cost of capital ("WACC") as the discount rate
for its investments as it believes that the reduction in WACC
deriving from the introduction of long-term debt financing does not
reflect the greater level of risk to equity investors associated
with leverage assets or levered portfolios. However, for the
purposes of transparency, the Company's pre-tax WACC as at 30
September 2021 was 5.3% (31 March 2021: 5.4%).
The Company has not included the impact of the discount rates
used in the NPIII investment, as the Company has no control or
influence over these rates and a weighted average discount rate is
not produced by NPIII, as their underlying investments are in
multiple geographies.
Asset life
The discounted cash flow methodology implemented in the
portfolio valuation assumes a valuation time horizon capped to the
current terms of the lease and planning permission on the
properties where each individual solar asset is located. These
leases have been typically entered into for a 25-year period from
commissioning of the relevant solar plants (specific terms may
vary). However, the useful operating life of the Company's
portfolio of solar assets is expected to be longer than 25 years.
This is due to many factors, including:
-- solar assets with technology components similar to the ones
deployed in the Company's portfolio have been demonstrated to be
capable of operating for over 45 years, with levels of the
technical degradation lower than those assumed or guaranteed by the
manufacturers;
-- local planning authorities have already granted initial
planning consents that do not expire and/or have granted
permissions to extend initial consented periods;
-- the Company owns rights to supply electricity into the grid
through connection agreements that do not expire, and
-- discounted cash flow valuation assumes a zero-terminal value
at the end of the lease term for each asset or the end of the
planning permission, whichever is the earlier.
Operating performance
The Company values each solar asset on the basis of the minimum
performance ratio ("PR") guaranteed by the vendor, or that
estimated by the appointed technical adviser during the acquisition
due diligence. These estimates have been generally lower than the
actual PR that the Company has been experiencing during subsequent
operations. We therefore deem it appropriate to adopt the actual PR
after two years of operating history when, typically, the plants
have satisfied tests and received Final Acceptance Certification
("FAC").
During the period, FACs were closed across 85MW. As at 30
September 2021, 77 UK solar assets and all 8 Italian solar assets
(totalling 642MW) achieved FAC and their actual PR was used in the
discounted cash flow valuation.
FAC timeline for remaining assets Capacity (MW)
Financial quarter ending December 2021 28
Financial quarter ending March 2022 24
April 2022 onwards 82
Total 134
NAV
The Company's NAV is calculated quarterly and based on the
valuation of the investment portfolio provided by the Investment
Adviser and the other assets and liabilities of the Company
calculated by the Administrator. The NAV is reviewed and approved
by the Investment Manager and the Board. All variables relating to
the performance of the underlying assets are reviewed and
incorporated in the process of identifying relevant drivers of the
discounted cash flow valuation.
In accordance with IFRS 10, the Company reports its financial
results as an Investment entity and on a non-consolidated basis
(see note 2b to the Financial Statements). The change in fair value
of its assets during the period is taken through the Statement of
Comprehensive Income.
The movement in the NAV was driven by the following factors:
-- An increase in short-term (2021-2025) UK power prices
forecasts provided by Consultants, being 56% higher than
assumptions at 31 March 2021. The Company used the forecasts
released by the Consultants up to the date of preparation of this
Interim Report;
-- the upward revision in short-term inflation forecasts;
-- the operating results achieved by the Company's solar assets; and
-- the dividends and operating costs paid during the period.
Operating Results
Profit before tax was GBP45.5m (30 September 2020: GBP23.6m)
with earnings per ordinary share of 7.74p (30 September 2020:
4.04p).
Operating Expenses and Ongoing Charges
The operating expenses, excluding preference share dividends
paid by the Company, for the period amounted to GBP3.3m (30
September 2020: GBP3.3m). The Company's ongoing charges ratio
("OCR") was 1.1% (2020: 1.1%). The budgeted OCR for the financial
year ending 31 March 2022 is 1.1%. The OCR, which has been
calculated in accordance with the Association of Investment
Companies recommended methodology, is an Alternative Performance
Measure .
Cash Flow Analysis
As at 30 September 2021, the Company held cash of GBP4.3m at
high credit rated financial institutions.
Cash received from assets in the period covered the operating
expenses, the preference shares dividend, the dividends paid in
cash to ordinary shareholders and part of the Investment into
HoldCos.
Cash flows of the Company Period ended 30 Period ended 30
Sep 2021 GBP'000 Sep 2020 GBP'000
Company cash balance at 1
April 10,809 25,127
Investment in HoldCos (24,057) (5,928)
Received from HoldCos 45,026 19,015
Directors' fees (106) (127)
Investment Manager fees (2,499) (2,565)
Administrative fees (653) (604)
Dividends paid in cash to
ordinary shareholders (19,618) (18,702)
Preference share dividends (4,584) (4,724)
Company cash balance at 30
September 4,318 11,492
NESF Group operating SPV's
The below table represents the unaudited consolidated financial
results of the Company's SPVs
Period ended September Period ended
2021 (unaudited) September 2020
GBP'000 (unaudited) GBP'000
Total SPVs revenue 67,193 70,481
EBITDA 49,334 58,723
EBIT 27,935 33,479
Cash income for the period(1) 28,672 32,490
1 Cash distributed to the fund during the year.
Cash Dividend Cover
The decrease in the dividend cover from 1.1x (31 March 2021) to
1.0x (30 September 2021) was the result of paying a dividend in
line with our progressive dividend policy, lower power prices
realised towards the beginning of the period, higher than normal
DNOOs impacting generation during the period and the temporary
impact of investing in assets which do not immediately yield
cash.
Once revenue is generated from these assets, recent power price
increases are captured through hedges already in place and DNOs
resume normal levels of activity, we expect to see an increase in
the dividend cover in future periods, all other factors remaining
the same.
Six months ended 30 September GBP'000 Pre-scrip dividends
2021 GBP'000
Cash income for period(1) 28,672
Net operating expenses for
period (3,258)
Preference shares dividend (4,718)
Net cash income available for
distribution 20,696
Ordinary shares dividend paid
during period 20,875
Cash dividend cover(2) 1.0x
1 Cash income differs from the Income in the Statement of
Comprehensive Income as the latter is prepared on an accruals
basis.
2 Alternative Performance Measures.
Financing
Financial debt
At 30 September 2021, the Company's subsidiaries (including
NPIII) had financial debt outstanding of GBP283m (31 March 2021:
GBP246m), on a look-through basis, as shown in the table below. Due
to a combination of low debt levels, and RPI linked subsidies, debt
covenants at the HoldCos level would only be breached at very low
power prices (less than c.GBP20/MWh). No covenants breaches have
occurred during the period.
Preference shares
At 30 September 2021, the Company had GBP200m of preference
shares outstanding (31 March 2021: GBP200m). The preference shares
are non-redeemable (except in limited exceptional circumstances),
non-voting and convertible into ordinary shares from 1 April 2036
at their issue price (GBP200m in aggregate) plus any unpaid
preference share dividends at the date of conversion. For financial
accounting purposes, and in line with IFRS the preference shares
are classified as long-term liabilities.
The preference shares are equivalent to non-amortising debt with
repayment in shares, and the Company is not required to use
cashflow, or raise funds, to repay them at the end of their life.
The absence of amortisation enhances the ability to pay the
ordinary share dividend, and repayment in shares removes
refinancing risk.
From 1 April 2030, the Company may elect to redeem all or some
of the preference shares. Redemption of the preference shares by
the Company would provide an attractive uplift if the share price
is trading at a healthy premium. Benefits of the preference shares
for NESF included;
-- a reduction in the exposure to secured debt financing;
-- the fixed preferred dividend of 4.75p per preference share
being a significantly lower all-in annual cash cost to the Company
compared to issuing ordinary shares; and
-- the further optimisation of the Company's capital structure
and, over the long term, increase in cash flows available to fund
ordinary share dividends or for reinvestment compared to
refinancing with conventional long-term amortising financial debt,
thereby increasing the cash dividend cover
The investment management fee is calculated based on the
ordinary share NAV and, accordingly, no management fee is payable
in respect of the preference shares. The terms of the preference
shares can be found in note 23 to the Financial Statements.
Total gearing
The financial debt, together with the preference shares,
represented a total gearing level of 44% (31 March 2021: 43%),
which is below the maximum limit of 50% in the Company's Investment
Policy.
Loan
to Facility Amount
Value(2) Amount Out-standing Applicable
No. of Termination
power (inc.
Provider plants options
/ arranger Type Borrower secured(1) (%) Tranches (GBPm) (GBPm) to extend) rate
MIDIS Fully-amortising
/ CBA long-term
/ NAB debt(3) NESH 21 (241MW) 48.2% Medium-term 47.8 47.8 Dec-26 2.91%(4)
Floating long-term 24.2 24.2 Jun-35 3.68%(4)
Index-linked RPI
long-term 38.7 34.6(5) Jun-35 + 0.36%
Fixed long-term 38.7 38.7 Jun-35 3.82%
Debt service
reserve facility 7.5 - Jun-26 1.50%
Fully-amortising
long-term RPI
MIDIS debt(3) NESH IV 5 (84MW) 45.0% Inflation-linked 27.5 20.6 (5) Sep-34 + 1.44%
Fixed long-term 27.5 23.5 Sep-34 4.11%
Total long-term debt 189.5
NIBC Revolving NESH II 2 (28MW) N/a N/a 20.0 Feb-22 LIBOR
credit + 2.20%
facility
Revolving
Banco credit LIBOR
Santander facility NESH VI 13 (100MW) N/a N/a 70.0 29.1 Jul-22 + 1.90%
Revolving
credit SONIA
Natwest/AIB facility NESH III 10 (69MW) N/a N/a 75.0(7) 50.0 Jun-24 + 1.20%
Total short-term debt 79.1
NPIII look
through debt N/a N/a N/a N/a N/a 14.2 (6)
Total
debt 282.8
1 NESF has 325MW under long-term debt financing, 197MW under
short-term debt financing and 343MW without debt financing
(excludes NPIII look through debt).
2 Loan to Value defined as 'Debt outstanding / GAV'.
3 Long-term debt is fully amortised over the period secured
assets receive subsidies (ROCs and others).
4 Applicable rate represents the swap rate.
5 Represents the "real" outstanding debt balance. The "nominal"
outstanding debt balances are included in the debt balances
provided in note 22b) to the financial statements.
6 The total combined short and long-term debt in relation to
NESF's commitment into NPIII (on a look through equivalent
basis).
7 Plus GBP25m accordion options.
Alignment of interest
As at 18 November 2021, NextEnergy Capital Group employees held
337,961 shares in NESF.
Events After the Balance Sheet Date
On 11 November 2021, the Directors approved an interim dividend
of 1.79p per ordinary share for the quarter ended 30 September 2021
to be paid on 31 December 2021 to ordinary shareholders on the
register as at the close of business on 19 November 2021.
NextEnergy Capital Limited
18 November 2021
Operating Portfolio
Remaining
Installed life of
Announcement capacity Cost plant
Power plant Location date Subsidy/PPA(1) (MW) (GBPm) (Years)
1 Higher Hatherleigh Somerset May-14 1.6 6.1 7.3(3) 16.5
2 Shacks Barn Northamptonshire May-14 2.0 6.3 8.2(3) 15.8
3 Gover Farm Cornwall Jun-14 1.4 9.4 11.1(3) 18.2
4 Bilsham West Sussex Jul-14 1.4 15.2 18.9(3) 22.7
5 Brickyard Warwickshire Jul-14 1.4 3.8 4.1(3) 18.1
6 Ellough Suffolk Jul-14 1.6 14.9 20.0(3) 27.4
7 Poulshot Wiltshire Sep-14 1.4 14.5 15.7(3) 17.4
8 Condover Shropshire Oct-14 1.4 10.2 11.7(3) 18.1
9 Llywndu Ceredigion Dec-14 1.4 8.0 9.4 28.2
Cock Hill
10 Farm Wiltshire Dec-14 1.4 20.0 23.6(3) 17.9
11 Boxted Airfield Essex Dec-14 1.4 18.8 20.6(3) 18.5
12 Langenhoe Essex Mar-15 1.4 21.2 22.9(3) 33.5
13 Park View Devon Mar-15 1.4 6.5 7.7(3) 33.3
14 Croydon Cambridgeshire Mar-15 1.4 16.5 17.8(3) 18.2
15 Hawkers Farm Somerset Apr-15 1.4 11.9 14.5(3) 18.5
16 Glebe Farm Bedfordshire Apr-15 1.4 33.7 40.5(3) 28.2
17 Bowerhouse Somerset Apr-15 1.4 9.3 11.1(3) 33.5
18 Wellingborough Northamptonshire Jun-15 1.4 8.5 10.8(3) 17.7
19 Birch Farm Essex Oct-15 FiTs UK 5.0 5.3(3) 18.7
Thurlestone
20 Leicester Leicestershire Oct-15 FiTs UK 1.8 2.3 11.6
21 North Farm Dorset Oct-15 1.4 11.5 14.5(3) 33.2
Ellough Phase
22 2 Suffolk Nov-15 1.3 8.0 8.0(3) 34.1
23 Hall Farm Leicestershire Nov-15 FiTs UK 5.0 5.0(3) 38.9
24 Decoy Farm Lincolnshire Nov-15 FiTs UK 5.0 5.2(3) 34.5
25 Green Farm Essex Nov-15 FiTs UK 5.0 5.8 19.5
26 Fenland Cambridgeshire Jan-16 1.4 20.4 23.9(2,4) 18.8
27 Green End Cambridgeshire Jan-16 1.4 24.8 29.0(2,4) 19.5
28 Tower Hill Gloucestershire Jan-16 1.4 8.1 8.8(2,4) 18.5
29 Branston Lincolnshire Apr-16 1.4 18.9 33.1
30 Great Wilbraham Cambridgeshire Apr-16 1.4 38.1 23.5
31 Berwick East Sussex Apr-16 1.4 8.2 97.9(2,5) 20.0
32 Bottom Plain Dorset Apr-16 1.4 10.1 33.7
33 Emberton Buckinghamshire Apr-16 1.4 9.0 38.6
34 Kentishes Essex Nov-16 1.2 5.0 4.5 40.0
35 Mill Farm Hertfordshire Jan-17 1.2 5.0 4.2 35.3
36 Bowden Somerset Jan-17 1.2 5.0 5.6 35.2
37 Stalbridge Dorset Jan-17 1.2 5.0 5.4 35.2
38 Aller Court Somerset Apr-17 1.2 5.0 5.5 20.5
39 Rampisham Dorset Apr-17 1.2 5.0 5.8 21.0
40 Wasing Berkshire Apr-17 1.2 5.0 5.3 25.2
41 Flixborough South Humberside Apr-17 1.2 5.0 5.1 26.3
42 Hill Farm Oxfordshire Apr-17 1.2 5.0 5.5 30.4
43 Forest Farm Hampshire Apr-17 FiTs UK 3.0 3.3 30.5
44 Birch CIC Essex Jun-17 FiTs UK 1.7 1.7 18.7
45 Barnby Nottinghamshire Jun-17 1.2 5.0 5.4 20.8
46 Bilsthorpe Nottinghamshire Jun-17 1.2 5.0 5.4 21.2
Wic kfiel
47 d Wiltshire Jun-17 1.2 4.9 5.6 21.6
48 Bay F a rm Suffolk Aug-17 1.6 8.1 10.5 32.4
49 Honington Suffolk Aug-17 1.6 13.6 16.0 32.3
50 Macchia Rotonda Apulia Nov-17 FiTs Italy 6.6 14.3
51 Iacovangelo Apulia Nov-17 FiTs Italy 3.5 14.6
52 Armiento Apulia Nov-17 FiTs Italy 1.9 14.6
53 Inicorbaf Apulia Nov-17 FiTs Italy 3.0 116.2(2,6) 14.4
Gioia del
54 Colle Campania Nov-17 FiTs Italy 6.5 (,) 15.1
55 Carinola Apulia Nov-17 FiTs Italy 3.0 15.1
56 Marcianise Campania Nov-17 FiTs Italy 5.0 15.0
57 Riardo Campania Nov-17 FiTs Italy 5.0 15.0
58 Gilley's Dam Cornwall Dec-17 1.3 5.0 6.4 33.2
59 Pickhill Bridge Clwyd Dec-17 1.2 3.6 3.7 20.4
60 North Norfolk Norfolk Feb-18 1.6 11.0 14.6 23.1
61 Axe View Devon Feb-18 1.2 5.0 5.6 25.9
62 Low Bentham Lancashire Feb-18 1.2 5.0 5.4 24.4
63 Henley Shropshire Feb-18 1.2 5.0 5.2 24.7
64 Pierces Farm Berkshire May-18 FiTs UK 1.7 1.2 17.6
65 Salcey Farm Buckinghamshire May-18 1.4 5.5 6.5 17.6
66 Thornborough Buckinghamshire Jun-18 1.2 5.0 5.7 19.5
67 Temple Normaton Derbyshire Jun-18 1.2 4.9 5.6 19.8
Fiskerton
68 Phase 1 Lincolnshire Jun-18 1.3 13.0 16.6 28.5
Huddlesford
69 HF Staffordshire Jun-18 1.2 0.9 0.9 19.3
70 Little Irchester Northamptonshire Jun-18 1.2 4.7 5.9 20.3
71 Balhearty Clackmannanshire Jun-18 FiTs UK 4.8 2.6 29.3
72 Brafield Northamptonshire Jun-18 1.2 4.9 5.8 20.2
Huddlesford
73 PL Staffordshire Jun-18 1.2 0.9 0.9 19.5
74 Sywell Northamptonshire Jun-18 1.2 5.0 5.9 19.6
75 Coton Park Derbyshire Jun-18 FiTs UK 2.5 1.1 19.6
76 Hook Somerset Jul-18 1.6 15.3 21.8(2) 32.5
77 Blenches Wiltshire Jul-18 1.6 6.1 7.8(2) 17.2
78 Whitley Somerset Jul-18 1.6 7.6 10.4(2) 32.2
79 Burrowton Devon Jul-18 1.6 5.4 7.3(2) 17.0
80 Saundercroft Devon Jul-18 1.6 7.2 9.6(2) 32.4
81 Raglington Hampshire Jul-18 1.6 5.7 8.1(2) 32.3
82 Knockworthy Cornwall Jul-18 FiTs UK 4.6 6.6(2) 16.5
83 Chilton Canetello Somerset Jul-18 FiTs UK 5.0 9.0(2) 30.8
84 Crossways Dorset Jul-18 FiTs UK 5.0 10.0(2) 30.8
85 Wyld Meadow Dorset Jul-18 FiTs UK 4.8 7.1(2) 31.8
86 Ermis Rooftop Portfolio Aug-18 FiTs UK 1.0 3.0 15.1
87 Angelia Rooftop Portfolio Aug-18 FiTs UK 0.2 0.6 15.0
88 Ballygarvey County Antrim Aug-19 1.4 NIROCs 8.2 8.5 26.3
Hall Farm
89 2 Leicestershire Aug-19 Subsidy-free 5.4 2.5 37.8
90 Staughton Bedfordshire Dec-19 Subsidy-free 50.0 27.4 37.4
91 High Garret Essex Oct-20 Subsidy-free 8.4 4.1 33.5
Long-term
92 Marham Norfolk Mar-21 PPA 1.0 0.7 24.2
Long-term
93 Sutterton Lincolnshire Mar-21 PPA 0.4 0.3 24.4
Long-term
94 The Grange Nottinghamshire Mar-21 PPA 50.0 32.1 39.3
Long-term
95 South Lowfield Yorkshire Mar-21 PPA 50.0 29.6 39.8
96 Newfield Cheshire May-21 FiTs UK 0.2 0.2 23.0
97 JSC Worcestershire May-21 FiTs UK 0.04 0.04 18.0
98 Karcher Oxfordshire Aug-21 Subsidy-free 0.3 0.2 23.5
99 Dolphin East Sussex Aug-21 Subsidy-free 0.2 0.2 25.2
Multiple
NextPower long-term
100 III(8) OECD Markets Jun-21 PPAs 29.9 20.2 n/a
Total 895 1,020 27.8(7)
1 ROCs, unless otherwise stated.
2 With project level debt.
3 Part of the Apollo portfolio.
4 Part of the Thirteen Kings portfolio.
5 Part of the Radius portfolio.
6 Part of the Solis portfolio.
7 Remaining weighted average life of the portfolio.
8 29.9MW represents the proportion of NPIII operational assets
owned by NESF on a look through equivalent basis as at 30 September
2021. NPIII is a portfolio of assets at different stages of their
project life cycle.
Portfolio Generation Performance
Since
Period ended 30 September 2021 acquisition
Irradiation Generation Irradiation Generation
Operational Acquisition Generation delta delta delta delta
Power plant date date (GWh) (%) (%) (%) (%)
1 Higher Hatherleigh Apr-14 May-14 4.1 2.7 -2.8 1.2 4.2
2 Shacks Barn May-14 May-14 4.3 -1.4 3.7 2.5 7.9
3 Gover Farm Jan-15 Jun-14 7.1 6.2 9.0 3.1 1.8
4 Bilsham Jan-15 Jul-14 11.9 4.5 7.2 4.8 5.5
5 Brickyard Jan-15 Jul-14 2.6 1.8 3.2 3.1 5.7
6 Ellough Jul-14 Jul-14 10.4 -1.6 -0.3 0.5 5.6
7 Poulshot Apr-15 Sep-14 10.0 0.2 3.8 0.8 5.0
8 Condover May-15 Oct-14 7.0 1.1 2.7 0.1 0.9
9 Llywndu Jul-15 Dec-14 6.0 1.6 10.5 -3.0 3.6
Cock Hill
10 Farm Jul-15 Dec-14 14.4 2.9 4.9 2.9 4.6
11 Boxted Airfield Apr-15 Dec-14 13.5 -1.1 2.4 3.0 5.3
12 Langenhoe Apr-15 Mar-15 15.7 2.2 5.5 5.7 8.7
13 Park View Jul-15 Mar-15 4.8 -0.5 1.6 -1.9 0.8
14 Croydon Apr-15 Mar-15 10.8 4.6 0.9 6.0 6.8
15 Hawkers Farm Jun-15 Apr-15 8.4 1.9 0.1 0.4 3.3
16 Glebe Farm May-15 Apr-15 23.9 5.4 8.6 6.1 11.7
17 Bowerhouse Jul-15 Jun-15 5.9 5.8 -8.6 3.1 -0.2
18 Wellingborough Jun-15 Jun-15 5.8 0.5 3.3 2.2 4.6
19 Birch Farm Sep-15 Oct-15 3.6 0.3 3.1 3.8 5.8
Thurlestone
20 Leicester(1) Oct-15 Oct-15 1.0 0.0 -5.4 0.0 -0.5
21 North Farm Oct-15 Oct-15 7.7 -1.7 -11.8 -2.8 -4.0
Ellough Phase
22 2 Aug-16 Nov-15 6.0 3.5 8.0 7.7 11.5
23 Hall Farm Apr-16 Nov-15 2.6 3.3 -19.5 3.6 0.3
24 Decoy Farm Mar-16 Nov-15 3.6 1.7 4.5 4.3 8.7
25 Green Farm Dec-16 Nov-15 3.4 -0.9 -2.6 3.0 3.5
26 Fenland Jan-16 Jan-16 14.9 1.5 6.7 4.7 9.0
27 Green End Jan-16 Jan-16 15.4 0.5 -9.2 4.3 3.1
28 Tower Hill Jan-16 Jan-16 6.1 3.3 8.7 3.4 7.0
29 Branston Mar-16 Apr-16 13.4 4.0 7.3 5.7 6.3
30 Great Wilbraham Mar-16 Apr-16 26.0 1.7 0.1 5.0 5.4
31 Berwick Mar-16 Apr-16 6.6 2.0 7.3 4.7 9.4
32 Bottom Plain Mar-16 Apr-16 7.5 4.2 2.7 3.2 3.8
33 Emberton Mar-16 Apr-16 5.6 1.6 -9.1 4.0 2.4
34 Kentishes Jul-17 Nov-16 3.7 0.7 1.0 4.9 5.4
35 Mill Farm Jul-17 Jan-17 3.5 3.5 2.0 7.8 9.8
36 Bowden Sep-17 Jan-17 3.7 -1.5 -2.4 0.0 0.8
37 Stalbridge Sep-17 Jan-17 3.8 -1.1 2.0 0.5 5.7
38 Aller Court Sep-17 Apr-17 3.8 2.7 2.6 3.3 4.7
39 Rampisham Sep-17 Apr-17 3.8 -3.8 -3.2 -2.1 -1.6
40 Wasing Aug-17 Apr-17 3.6 1.1 3.7 5.7 9.0
41 Flixborough Aug-17 Apr-17 3.5 4.2 4.4 4.9 7.2
42 Hill Farm Mar-17 Apr-17 3.6 2.8 7.3 6.4 8.4
43 Forest Farm Mar-17 Apr-17 2.2 2.3 6.4 4.6 8.5
44 Birch CIC May-17 Jun-17 1.2 0.6 -0.9 4.7 3.9
45 Barnby Aug-17 Jun-17 3.5 1.8 5.8 4.0 4.2
46 Bilsthorpe Aug-17 Jun-17 3.5 2.8 5.6 3.9 6.1
Wic kfiel
47 d Mar-17 Jun-17 3.5 2.4 2.9 5.4 4.8
48 Bay F a rm Sep-17 Aug-17 5.5 -2.0 4.1 6.1 7.5
49 Honington Sep-17 Aug-17 9.2 -3.1 -1.5 3.0 2.9
50 Macchia Rotonda Nov-17 Nov-17 5.9 7.1 -0.7 6.0 3.8
51 Iacovangelo Nov-17 Nov-17 3.3 6.4 3.8 4.6 6.0
52 Armiento Nov-17 Nov-17 1.8 6.3 7.1 5.2 7.4
53 Inicorbaf Nov-17 Nov-17 2.9 6.7 7.0 5.6 6.8
Gioia del
54 Colle Nov-17 Nov-17 6.1 1.2 3.8 0.6 3.8
55 Carinola Nov-17 Nov-17 2.4 1.5 -6.4 2.2 3.5
56 Marcianise Nov-17 Nov-17 4.4 1.1 0.5 2.5 3.4
57 Riardo Nov-17 Nov-17 4.2 -0.4 -5.6 1.9 0.4
Gilley's
58 Dam Nov-17 Dec-17 3.7 -2.3 -0.4 -4.3 -2.0
Pickhill
59 Bridge Dec-17 Dec-17 2.6 5.7 8.8 4.7 8.0
60 North Norfolk Dec-17 Feb-18 7.4 0.4 -3.2 5.6 6.6
61 Axe View Dec-17 Feb-18 3.7 6.5 7.0 5.6 7.1
62 Low Bentham Dec-17 Feb-18 3.6 8.3 8.5 2.6 4.2
63 Henley Jan-18 Feb-18 3.5 4.9 7.4 3.4 6.2
64 Pierces Farm May-18 May-18 1.2 -0.8 3.8 3.3 7.0
65 Salcey Farm May-18 May-18 3.9 1.6 3.5 8.0 5.8
66 Thornborough Jun-18 Jun-18 2.8 -4.5 -20.5 4.2 -6.5
67 Temple Normaton Jun-18 Jun-18 3.0 1.1 -10.8 3.8 -3.4
Fiskerton
68 Phase 1 Jun-18 Jun-18 8.4 1.1 -6.8 7.0 0.1
Huddlesford
69 HF Jun-18 Jun-18 0.6 3.3 8.4 5.5 4.8
70 Little Irchester Jun-18 Jun-18 3.0 -2.8 -9.9 3.9 -5.8
71 Balhearty Jun-18 Jun-18 3.2 3.4 -0.2 -0.2 -8.8
72 Brafield Jun-18 Jun-18 3.4 0.3 -4.2 6.2 0.5
Huddlesford
73 PL Jun-18 Jun-18 0.6 2.7 1.2 5.1 2.2
74 Sywell Jun-18 Jun-18 3.5 -1.6 0.6 5.5 1.2
75 Coton Park Jun-18 Jun-18 1.6 -1.7 2.8 2.8 4.4
76 Hook Jul-18 Jul-18 11.0 2.1 0.5 3.3 1.6
77 Blenches Jul-18 Jul-18 4.0 0.1 -2.3 3.9 5.6
78 Whitley Jul-18 Jul-18 5.4 6.7 -0.7 5.1 -0.4
79 Burrowton Jul-18 Jul-18
80 Saundercroft Jul-18 Jul-18 9.0 4.4 -1.8 5.8 3.5
81 Raglington Jul-18 Jul-18 3.6 0.5 -15.2 3.7 -9.2
82 Knockworthy Jul-18 Jul-18 2.9 2.2 -16.3 1.9 -8.1
83 Chilton Canetello Jul-18 Jul-18 3.8 4.7 3.4 4.6 5.4
84 Crossways Jul-18 Jul-18 3.8 2.6 -0.2 3.3 3.2
85 Wyld Meadow Jul-18 Jul-18 3.4 -0.5 -6.4 -1.2 -2.3
86 Ermis(1) Aug-18 Aug-18 0.6 0.0 -1.5 0.0 -0.9
87 Angelia(1) Aug-18 Aug-18 9.2 -3.1 -1.5 3.0 2.9
88 Ballygarvey Mar-18 Aug-19 5.9 7.1 -0.7 6.0 3.8
Hall Farm
89 2 Aug-19 Aug-19 2.9 7.7 -15.8 9.6 -1.9
90 Staughton Dec-19 Dec-19 35.0 7.5 5.7 5.6 3.3
91 High Garrett Oct-20 Oct-20 5.5 4.1 -5.6 5.1 -5.6
92 Marham(2) Jan-21 Mar 21 - - - - -
93 Sutterton(2) Mar-21 Mar 21 - - - - -
94 The Grange(2) Jan-21 Mar 21 - - - - -
95 South Lowfield(2) Jun-21 Mar-21 - - - - -
Newfield
96 (NZ) (1) Apr-19 Apr-19 - - - - -
JSC (NZ)
97 (1) Mar-19 Mar-19 - - - - -
Karcher (NZ)
98 (1) Nov-19 Nov-19 - - - - -
Dolphin (NZ)
99 (1) Jul-21 Jul-19 - - - - -
NextPower
100 III(3) Multiple Jun-21 - - - - -
Total(2) 539 2.4 1.1 2.9 4.6
1 Rooftop asset which is not monitored for irradiation.
2 An asset which is yet to pass provisional acceptance clearance
(PAC) is not reported by the Asset Manager.
3 NextPower III performance not included.
Sustainability and ESG
Introduction from the CEO of NextEnergy Capital Group
As the world accustoms itself to living with a modern-day
pandemic, we have learnt just how responsive and adaptable
governments, businesses, communities and individuals can be in the
face of such a crisis. It is this responsiveness which is necessary
to redouble efforts to achieving the 17 UN SDGs, progress against
many of which has been detrimentally affected by Covid-19.
The development of reliable, sustainable and resilient
infrastructure is at the core of the recovery plan and at
NextEnergy Capital Group (NEC) we have the technical experience to
play an instrumental role in this transition. Our commitment to
generate a more sustainable future, coupled with evolving our
framework for managing, measuring, and reporting our contribution
to the UN SDGs, as well as evaluating our impact on the world
around us, is central to guiding our sustainable investment
strategy and approach to ensure we continue to achieve our ESG
goals in the future.
Our framework applies to the whole value chain of our business,
from our clients 'investments, our employees to our suppliers and
the broader community we operate in. This framework is built on
three pillars: Climate Change, Biodiversity and Human Rights.
In the context of COP26, NESF presented how it continues to
support the UK Government's net zero ambitions: NESF can offer
investors the opportunity to decarbonize their portfolio and
transition to a net zero economy. For the past 6 months, NESF has
contributed to avoid emitting 229,000 tons of CO(2) e to the
atmosphere. NESF also presented the benefits that an investment in
solar PV and sustainable energy provides beyond climate mitigation:
in particular, it explained how it continues to contribute to the
economic growth of the local area, increase biodiversity value and
encourages local community engagement.
NESF continues to be committed to enhance biodiversity and
achieve positive gain, contributing to build climate resilient
infrastructure. The core of NEC's sustainability framework is our
Sustainable Investment Policy, which articulates the value-creating
ability of ESG considerations in our business and operations, and
the solar sector more broadly, as well as our commitment to the
United Nations Principles for Responsible Investment. Our
Sustainable Investment Policy applies to both NESF and our private
equity funds; it outlines our business principles and explains how
we integrate ESG factors throughout the investment process.
This year we have increased our transparency in line with the EU
Sustainable Finance Disclosure Regulation (SFDR) and have issued an
ESG Document where we have articulated how we take ESG factors into
account for the group and for each specific fund, including
NESF.
NESF ESG at a Glance for the period ended
30 September 2021
Environmental Performance
539GWh clean energy 229ktCO(2) 299,000 equivalent
generated e avoided homes powered
for a year
Social Performance
GBP22,000 community 9 new O&M contracts signed
funding generating new jobs
Governance performance
Total board meetings Gender diversity 25%
held during the six-month female at board level
period - 11
NESF's Sustainability Framework
We believe that solar energy has a pivotal role to play in
responding to rapidly increasing energy demand while addressing the
global climate agenda. NESF's commitment to tackling climate change
ties into the additional ESG objectives we have set within NEC's
business practices in order to develop a sustainable energy
investment strategy.
Both NESF and NEC's commitment to sustainability is built around
three fundamental pillars [see below]: climate change, biodiversity
and human rights. We believe that only by acknowledging the
interconnections that exist between the three pillars and
addressing them together, can we make a meaningful contribution to
global sustainable development.
NESF's Approach to ESG
Our ESG approach is based on integration and is applied in three
different steps: identify, manage, and report.
Integration of ESG factors occurs throughout NESF's investment
and development process, from an initial screening, to full due
diligence, risk management, implementation, and finally to
measuring and reporting on the factors during the asset management
phase.
NESF pays particular attention to any ESG risks associated with
its supply chain and maintains active dialogue by engaging with key
stakeholders.
ESG responsibilities reside with the Head of ESG at NEC, the
Fund's Investment Adviser. The Head of ESG reports directly to
NEC's CEO and is also a member of the Fund's Investment
Committee.
Sustainability Pillars
Climate Change:
NESF is committed to supporting the UK Government in its
ambitious objective of bringing all greenhouse gas emissions to net
zero by 2050 and limiting global average temperature rise to 2degC
from pre-industrial levels. NESF communicates its positive
contributions to climate change mitigation via reporting annually
on its clean energy generation and the CO(2) e emissions avoided
for the portfolio. This year NESF has expanded its reporting to
include also historical greenhouse gas (GHG) emission avoided as
well as the estimated emission associated with its portfolio,
namely the GHG scope 1, 2 and 3 with the objective of increasing
transparency towards net-zero ambitions.
Biodiversity:
A key focus for NESF has been the opportunity to enhance
biodiversity across the portfolio's sites. The Fund's commitment to
leading best practice in biodiversity within the solar industry
begins during the site selection phase and extends to the life
cycle of each asset
Human Rights and Modern Slavery:
NESF respects fundamental human rights principles and is against
any form of slavery and forced labour, as stated in its Modern
Slavery Statement. The Group's commitment to respecting human
rights is guided by the United Nations Declaration of Human Rights;
NESF also recognises both the OECD Guidelines on Multinational
Enterprise and the UN Guiding Principles of Business and Human
Rights as key frameworks through which to identify and manage human
rights associated with our operations, our supply chain, and our
business relationships.
ESG Integration
By integrating NEC's Sustainable Investment Policy into NESF's
investment and development process, we are ensuring sustainable
growth can be delivered over the long-term. As NESF is involved in
secondary market acquisition as well as new developments; we have
defined a process by which we identify, manage, and report on any
ESG risks and opportunities for both types of activities. An
outline of our approach is set out below
Identify
NESF has a tried and tested investment and development process.
ESG considerations form part of the investment decision-making at
each stage of an investment and of the site's development. For
secondary market acquisitions that occurred after September 2019,
when the updated sustainability policy was approved, NESF
undertakes due diligence in the pre-acquisition phase, to identify
any potential risk associated with ESG matters. Once an initial
screening has confirmed that NESF is not entering into any excluded
activities, full due diligence is undertaken to review compliance
with national and local environmental legislation, social policies
and best practice, including the Solar Energy UK 10 Commitments for
Solar Farm Developers. The due diligence is usually undertaken by
an external adviser, and the outcome is presented to the Investment
Committee for the final decision.
For new developments, a comprehensive set of national and local
data sets are considered to avoid sensitive areas and to comply
with the applicable guidelines for the deployment of solar
projects. This development phase is supported by the use of
computer-based geographic information system modelling tools, and
site assessments are used to review and exclude inappropriate sites
during early stages of development.
Excluded Activities & Site Selection
In accordance with the international, national and local
landscape designations recognised by the UK Government, NESF does
not invest in areas of high biodiversity or landscape character
value. The NEC team confirms this exclusion at the earliest stage
of site selection.
In line with NEC's policy, no activity will be undertaken if it
would impact upon indigenous people or cause potential relocation
of communities where no Free Prior Informed Consent (FPIC) has
occurred before to construction. These two exclusions are very
unlikely to happen in the UK.
Manage
When potential risks are identified during the preacquisition
and development phase, the ESG team, together with the investment
team and, where relevant, external advisers, agree upon the
necessary mitigation measures to manage and minimise the impacts.
Usually, an action plan that includes these mitigation measures is
put forward and presented to the Investment Committee for
approval.
The action plan is then negotiated with contractors, including
Engineering, Procurement and Construction (EPC) and operations and
maintenance (O&M), and then handed over to the asset management
arm of NEC for management. Wise Energy oversees the implementation
of these measures, including biodiversity management, land
management, community engagement, and health and safety, amongst
others.
Wise reports on any progress towards these plans on a regular
basis, and in addition will measure and manage a number of selected
KPIs based on the SDGs which have been identified as material to
our business and operations (see our Sustainable Development Goals
Report).
Report
NESF is committed to a high level of transparency on ESG issues
and reports on the performance of the operational portfolio against
progress on any ESG action plans as well as on a selected number of
KPIs, as mentioned above.
During the current financial year, we have reported in
compliance with the requirement of the EU Sustainable Finance
Disclosure Regulation; our ESG Disclosure Document was issued on
the 10 March 2021 via our website (nextenergysolarfund.com).
NESF's performance in relation to the SDGs was recognized
through its contribution to SDG 3 (Good Health and Wellbeing), SDG
7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and
Infrastructure), SDG 12 (Responsible Consumption and Production,
SDG 13 (Climate Action) and SDG 15 (Life on Land). reported in the
Group's 2020 SDGs report, available on our website
(nextenergysolarfund.com).
These KPIs are independently verified by the Green Investment
Group (GIG) who has been hired by NEC to support the group's impact
reporting efforts. NESF's contribution to these goals was reported
in the Group's 2020 SDGs report, available on our website
Particular attention is given to climate related reporting. In
line with NEC being an official supporter of the Task Force on
Climate-Related Non-Financial Disclosure ("TCFD"), as well as both
NEC and NESF having net-zero ambitions, NESF has recently
commissioned the Green Investment Group to additionally report on
its historical CO(2) e emission reductions and to calculate its
portfolio scope 1, 2 and 3 carbon footprint.
NESF & SFDR
The Sustainable Finance Disclosure Regulation (SFDR) has come
into force on the 10th of March 2021, requiring financial market
participants to disclose on ESG policies and practices. As
previously mentioned, to comply, NESF has published an ESG
Disclosure document on its website and has made the relevant
disclosure in the annual report as well as pre-contractual
disclosure. This document outlines how NESF substantially
contributes to climate mitigation, how it does no significant harm
to the other four environmental objectives applicable to the solar
PV sector (climate adaptation, water management, circular economy
and biodiversity), and how it complies with the minimum
safeguarding standards, including, but not limited to, human rights
violations. NESF classify under Art. 9 of the SDFR and in the
future will disclose accordingly. An FAQ document has been
published on the investment adviser website to clarify how NESF
(and other funds) are planning to comply with future EU SFDR
requirements.
Supply Chain
In line with our mission of creating a more sustainable future
by leading the transition to clean energy, NEC has been at the
forefront of integrating ESG considerations into its investment
process, including the supply chain.
Early on, we developed a supply chain risk management approach
consistent with the Group's sustainability framework. We deal with
this issue through two parallel processes: ongoing ESG due
diligence at asset and portfolio level and an extensive stakeholder
engagement process.
NESF's suppliers have to abide by the Group Code of Conduct for
Suppliers and respond satisfactorily to our ESG due diligence. NESF
has developed specific due diligence questionnaires to assess
suppliers' human rights and labour policies and practices, as well
as other ESG factors, in order to identify potential risks within
its supply chain. This process is embedded into NESF's investment
process and includes module, inverter and battery
manufacturers.
In addition to each individual investment, the supply chain due
diligence is undertaken with key selected manufacturers with which
NESF and the Group have signed a master framework agreement. NESF
has developed module framework agreements as the structure through
which to identify and select top-tier, reputable manufacturers with
a proven track record of delivering high quality products (i.e.
manufactured with high durability, easy dismantling, refurbishment
and recycling). This framework incorporates quality control,
product certification and international standards, including ISO
9001 and IEC61215:2016; thereby providing visibility of the entire
supply chain and materials used during production. NESF has
included a contractual obligation in these agreements for suppliers
to abide by our Code of Conduct.
NESF is aware of the ongoing allegations of forced labour in the
solar supply chain in Xinjiang and we are committed to preventing
modern slavery in our own activities and those related to our
business relationships, including supply chain. This is supported
by our public policy and statements.
NESF strongly believes that supply chain management can be
tackled collectively through a process that requires a long term
commitment and willingness to influence market changes to eradicate
human rights abuses and raise labour practices and standard
globally. This is particularly true for our Tier 2 and 3 suppliers,
for which it is not always easy to get transparent and verifiable
information. NEC continues to engage regularly with a number of
stakeholders, including NGOs, industry associations, reputable
adviser and manufacturers to increase transparency and
traceability. NEC, NESF's investment adviser, has signed the Solar
Energy Industry Association (SEIA) and the Solar Energy UK (SEUK)
pledge against slave labour; NEC's head of ESG has been appointed
as the chair of the SEUK task group on Responsible Sourcing and in
Sept 2021 she has led the kick off of a Supply Chain Monitoring
Programme between SEUK and SPE aimed to provide the industry with a
deeper understanding of its supply chain and a set of auditable
standards which can be applied consistently across the value chain.
The outcome of this programme will be available in early 2022.
We continue to monitor our suppliers and engage with them to
ensure the highest levels of ESG standards are adhered to. Given
our track record and the track record of our dedicated ESG team, we
believe we are at the forefront of ensuring engagement and change
where unacceptable practices are identified throughout our sector
and supply chain.
Stakeholder Engagement and Stewardship
During the reporting year, several members of NEC's staff
engaged with SUK across various workstreams, including one employee
who chairs the SUK Natural Capital Working group, while others are
involved with supporting SUK on their engagement with the
Department for Business, Energy and Industrial Strategy (BEIS) on
the technical interpretation of the Nationally Significant
Infrastructure Projects (NSIP) threshold. Lastly, other employees
have been working with Ofgem around the Renewables Obligation (RO)
audits program.
NESF's Stewardship efforts have seen the Fund involved in
several consultations with the UK Government on the Contracts for
Difference scheme, as well as leading negotiations with the
Valuation Office Agency (VOA) on the revised ratings list for
solar, network charging and cost modelling. In addition, the NEC
Group is a signatory of the United Nations Principles for
Responsible Investment ("UNPRI"), and a member of the Institutional
Investors Group on Climate Change ("IIGCC"). The ESG Team actively
engages and collaborates with both organisations to promote best
practice within the solar industry, and regularly discusses any
relevant recommendations and important trends for NESF with
colleagues who are responsible for investment and asset management
of the Company's portfolio. NESF also engages with an extended set
of stakeholders to continuously improve its approach to ESG and
supply chain matters in the solar sector. These include
conservation groups, such as IBAT Alliance, experts on climate
change, human rights and biodiversity, and non-profit
organizations, such as the Business and Human Rights Resource
Centre.
Accountability and Governance
Responsibility for NESF's ESG risk management, reporting and
stakeholder engagement falls within NEC's ESG team.
The Head of ESG, Giulia Guidi, reports to NEC's CEO and is
responsible for setting the strategy and for implementing the
Sustainable Investment Policy for the Group and in particular, for
the Fund. She sits on the Fund's investment committee and takes an
active role in the investment decision-making process. She meets
regularly with senior managers of the Fund to continue to raise
awareness around global societal issues, discuss new trends, review
the stakeholder engagement strategy, and the wider Group business
strategy.
NESF has built strong governance around these issues, ensuring
that the team works not only alongside the investment and
development teams, but also meets regularly with the procurement
offices, the operational team, the biodiversity team, the portfolio
managers, and the SPV's managers, in order to ensure that ESG is
integrated at the different stages of investment and
development.
The ESG team consists of, Giulia Guidi, with more than 20 years
of combined experience in ESG risk management in the financial
sector, and Phoebe Wright, the ESG Analyst for the NEC Group.
ktCO(2) e avoided
since IPO Units
1,718 ktCO(2) e
Green impact: historic performance
Metric Units HY2021 FY2021 FY2020 FY2019 FY2018 FY2017 FY2016 FY2015
GHG avoided ktCO(2) e 228.7 317.6 307.7 299.4 211.2 191.4 110.0 30.6
NOx avoided tonnes 204.4 283.4 274.4 276.5 193.1 176.3 108.3 41.3
Sox avoided tonnes 378.0 527.5 511.9 499.2 365.9 335.8 214.4 94.1
PM2,5 tonnes 17.4 24.0 23.2 22.6 15.9 14.5 8.4 2.4
PM10 tonnes 4.3 5.9 5.8 5.6 4.0 3.7 2.3 0.9
Fossil
Fuels tonnes oil
avoided equivalent 99.0 135.9 131.2 127.7 90.0 81.6 46.9 13.0
million barrels 0.7 1.00 0.96 0.94 0.66 0.60 0.34 0.10
Source: Green Investment Group
Environmental, Social and Governance factors Environmental
In the context of our business, environmental factors considered
throughout the investment and ownership phase include climate
change, biodiversity and landscape, potential water impacts, as
well as circular economy considerations.
Climate change: NESF contributes to positive climate mitigation
and it is committed to reporting its CO(2) e avoided emission on a
year-on-year basis, as well as through employing historical data.
GIG has also supported us in estimating the carbon footprint
associated with the lifecycle of our portfolio, including our
greenhouses scope 1, 2 and 3. NESF's carbon footprint throughout
the lifecycle is minor, and we aim to start collecting additional
data in the future to assess how we can achieve a net zero
objective. Climate-related risks, such as areas that according to
the Environment Agency's datasets are at risk of flooding, are
identified during the pre-investment phase. We currently avoid
flood risk areas, however sometimes we can model them to ensure
that the project minimises flood risk. In the past, mitigation
measures put in place for solar projects have helped to alleviate
the risk of flooding on land adjacent to the site. Despite the
operational lifetime of NESF's sites being up to 45 years, all
sites are designed using a 100-year flood projection to account for
projected climate-induced risks. In line with our TCFD commitments,
and, based on potential initial risks identified, at a future date
we could commission climate-related physical risk assessment for
climate-induced risks.
Biodiversity: NEC has a dedicated Biodiversity team that is
working with organisations such as Wychwood and Twig to ensure that
land management and native fauna and flora are being considered
throughout the investment and ownership phases. A set of proven
biodiversity solutions are included within planning-controlled site
proposals, with the view of ecologically enhancing the project area
and any additional land held under the project ground lease. NEC
has developed a specific Universal Biodiversity Management Plan
("UBMP") for NESF sites (see case study 1) and NESF has hired
biodiversity specialists to design and implement bespoke and
effective measures that develop, repair and connect local wildlife,
habitats and ecosystems. Our UBMP also exists to improve local
stakeholder relationships by educating the community on the
benefits of transforming solar plants into ecosystem-friendly
assets. This makes up part of NEC's wider Biodiversity Strategy
which works to support the UK Government's 25-year Environmental
Plan2. During the asset's operational lifetime, schemes are also
designed to allow sheep grazing. Such schemes employ densities
which work within the land's natural carrying capacity. They are
devised in conjunction with the broader environmental, landscape
and ecological objectives of site-specific measures, which are
agreed in advance with local councils, as well as the UBMP.
Circular economy: where possible, biodegradable or recyclable
materials are sourced. At the end of the solar farm's life, we
expect there to be a residual value in most of the materials used
in the modules, for example glass, silicon, steel, aluminium and
copper. The value of these materials is expected to pay in full for
the decommissioning costs of the solar farms.
Social
NESF pays particular attention to any social impacts that could
arise in the communities in which we operate, as well as to broader
impacts that could be present throughout our supply chain. NESF
focuses its attention on the following factors:
Community engagement: during the pre-acquisition phase, NESF
closely engages with local parishes and councils to ensure the
suitability of site proposals. Where possible, community feedback
is incorporated into the transaction proposals so that we can work
on long-term community development plans (see case study 2). We
also commit to employing people locally where practical and
possible. In addition, community funds are established to promote
development and support community renewable energy projects and
initiatives. NESF is dedicated to using our solar farms as
educational opportunities, particularly regarding the promotion of
the value of biodiversity and clean energy.
Health and safety: Regarding occupational and environmental
health and safety standards, we uphold minimum construction and
production-related industry standards, such as those set out in the
Construction, Design and Management Regulations 2015 and the
International Organisation for Standardisation's requirements.
These standards are incorporated into the main service delivery
contracts and impose contractual obligations on our suppliers.
Labour and human rights: NESF has zero tolerance of human rights
abuses across the value chain. We work with our counterparties to
ensure that they abide by our human rights related principles, as
outlined in NESF's Modern Slavery Statement, NEC's Sustainable
Investment Policy and NESF Human Rights Statement. To this extent,
NEC has included human rights related criteria in our solar PV
module framework agreements (see "Supply chain"). We have also
added an obligation for our EPC and O&M contractors and all
suppliers to comply with our Code of Conduct for suppliers, which
include amongst others, environmental, working condition and human
rights related standards.
Governance
As part of our ESG approach we want to engage with
counterparties that have the highest standards in terms of
transparency and governance.
Anti-bribery, Anti money Laundering, corruption and tax evasion:
It is both NESF's and NEC's policy to conduct all of its business
in an honest and ethical manner. We have a zero tolerance policy
towards bribery, corruption and the criminal facilitation of tax
evasion. As part of the investment process, NESF undertakes due
diligence on each counterparty to ensure they act professionally,
fairly and with integrity in all business dealings.
NESF ESG Case Studies
Case Study 1: Universal Biodiversity Management Plans (UBMP)
Following the success of last year's UBMP sites, NEC has
launched an additional 15 sites within the NESF UK portfolio to
gain UBMP status. The sites will have universal non-site-specific
measures such as hibernacula, bug hotels, nectar rich shrubs,
wildflowers and bird and bat boxes introduced. These initiatives
will add to the biodiversity net gain of the sites. Currently, in
September 2021 11 sites underwent wildflower seeding. These
measures have been introduced to increase net gain within the
portfolio and supports NEC's commitment to their Biodiversity
Strategy. To ensure that these initiatives bring the desired
change, the sites will be monitored to gauge progress. Overall, for
2021, the Biodiversity Team have 11 sites fully completed at UBMP
status as per the Wychwood guidance maps. It is envisaged that the
remaining four partially improved sites will be completed by the
end of the year subject to weather conditions.
Case Study 2: Exemplar Sites Update
Exemplar sites are monitored on an annual basis to introduce
biodiversity which provides tangible data. This year carbon soil
surveys were carried out to understand how much carbon
sequestration has been achieved since the site was constructed.
Surveys have been completed at the end of August 2021 and the
reports will be issued by the end of the year. The Exemplar
portfolio shows promising results of providing a habitat for birds
listed on the high conservation concern list. The team have
instructed the BMP work to be carried out at Temple Normanton,
Balhearty and Brafield later this year. These were the 2019
earmarked sites that were put on hold due to reinstatement work.
The team were also approached by Lancaster University to take part
in the Natural Capital Carbon study. This research is to explore
how much carbon sequestration is taking place at solar farms on an
annual basis. Therefore, the four additional sub free sites agreed
can go ahead in conjunction to the additional Exemplar sites soil
carbon testing.
In summary this means we have 16 sites scheduled for soil
testing this year. This includes the 8 exemplar sites and 8
ex-subsidy sites.
Case Study 3: Stakeholder Engagement - RSPB Operation Turtle
Dove
Our Solar farms support local stakeholders, provide investment
to the area, and help drive the safeguarding of the local
environment. NextEnergy Capital teamed up with RSPB and the sites
landowner this summer at one of our Exemplar sites, Langenhoe to
support the initiative 'Operation Turtle Dove'. Turtle Doves are
the fastest-declining bird species in the UK and Operation Turtle
Dove aims to reverse that by building on research throughout their
migratory route and establishing feeding habitats throughout their
core breeding range by working with farmers, businesses, and
landowners. We aim to be a part of this scheme next year and help
support native wildlife in the community where our solar farms are
located.
Case Study 4: The Big Butterfly Count
The NESF UK portfolio sites that was being surveyed this year
was involved in 'The Big Butterfly Count', a UK-wide survey aimed
at helping assess the health of the environment simply by counting
the amount and type of butterflies (and some day-flying moths) we
see. This year's Big Butterfly Count ran from the 16th of July to
the 8th of August. Biodiversity is incredibly important to all
NextEnergy Capital managed solar assets and at NextEnergy Solar
Fund (NESF) Langenhoe, Essex solar farm, our ecologist Wychwood
Environmental Ltd discovered one new butterfly species that has
never been recorded at the site before.
Case Study 5: Emberton's Chamomile
German chamomile was sown in 2019 at Emberton and harvested by
hand to show how solar farms could be multipurpose and act as a
cottage industry. In 2020, Roman chamomile was sown at Emberton as
this was a perennial species at is expected to flower every year.
In 2021, the biodiversity surveys confirmed that chamomile was
present in between the rows aiding the local pollinators. The
chamomile crop was harvested to produce chamomile tea.
Case Study 6: 'Adopt A Beehive' Scheme
The team are working with local beekeeping associations to
introduce beehives within the portfolio. As we are all aware,
pollinators are in decline and the team want to work will the local
community to try and highlight how multipurpose solar farms can
support the increase in biodiversity net gain. Currently, Hook
Valley has had hives introduced as part of this initiative.
Bilsham, Low Bentham, Burrowton and Saundercroft are scheduled to
have hives on-site by the end of the year, followed by Park View
that is in the pipeline.
Recognition of NESF's Green Credentials
During the year ending 31 March 2020, the Company was awarded
the London Stock Exchange's Green Economy Mark, which recognises
companies that derive over 50% of their annual revenues from
products and services that contribute to the global green
economy.
The Company was also successful in obtaining Guernsey Green Fund
status from the Guernsey Financial Services Commission ("GFSC").
Following an application to the GFSC via Route 1 suitable
third-party certification, NESF is deemed to have met the following
investment criteria as outlined in the Guernsey Green Fund Rules,
2018 ("Rules"):
-- the property of a Guernsey Green Fund shall be invested with
the aim of spreading risk and with the ultimate objective of
mitigating environmental damage resulting in a net positive outcome
for the environment; and
-- a Guernsey Green Fund shall comprise 75% of assets by value
that meet the Rules' criteria and the remaining 25% must not lessen
or reduce the Guernsey Green Fund's overall objective of mitigating
environmental damage or comprise an investment of a type specified
within schedule 3 of the Rules.
The Route 1 suitable third-party certification was provided by
Grant Thornton Limited in the form of an independent limited
assurance report and their engagement was conducted in accordance
with the International Standard on Related Services ("ISRS") 4400
"Engagements to Perform Agreed-Upon Procedures Regarding Financial
Information".
Charitable Donation to the NextEnergy Foundation (the
"Foundation")
The Foundation is an international charity founded in 2017 with
the vision of participating proactively in the global effort to
reduce carbon emissions, providing clean power sources in regions
where they are not available, and contributing to poverty
alleviation. The Foundation is NEC's personal effort to support
small and commendable projects that would otherwise not be in the
remit of its operations. NEC has pledged 5% of its profits annually
to the Foundation, recognising the importance of benefiting
communities both in which it is present as well as those
beyond.
NESF has made charitable donations totalling of GBP130,000 to
the Foundation since IPO. The funds donated were utilised to
contribute to projects directly related to the Foundation's mission
of alleviating poverty through the nexus with renewable energy
access, but also its expanded remit to respond to those most
affected socially and economically by the Covid-19 pandemic. This
has included:
-- Completing the installation of solar systems on 100% of the
primary schools in the Nkhata Bay District, Malawi;
-- Contributing to the installation of a solar water farm which
will provide purified drinking water for up to 2,500 litres per day
in the Cabo de la Vela community, Colombia; and,
-- Distributing food parcels to vulnerable children and
marginalised elderly across the UK and Italy over the 2020/21
Festive period.
More details about the projects which Foundation has, and is
currently supporting, can be found on the Foundation website
(nextenergyfoundation.org).
Looking Ahead and Next Steps
For NESF, ESG integration is an evolving process where
stakeholder engagement and implementation of industry best practice
helps us to continuously improve our practices and become a leader
in the solar sector.
In line with our continued commitment to climate change
solutions, and our support of the UK Government's Net Zero
ambition, we aim to continue our stakeholder engagement on this
subject and aim to provide further transparency on what a net zero
scenario implies for a solar PV portfolio.
We are planning to continue to strengthen our ESG disclosures
and to deepen the overall integration of ESG into our investment
process, in line with the evolving requirements of the EU Taxonomy
and Disclosure Regulation; we aim to measure NESF's current
portfolio performance through an expanded set of key performance
indicators line with the EU Regulatory Technical Standard.
Another key area of focus continues to be the assessment of our
supply chain, including module, inverter and battery suppliers, in
order to determine their approach to environmental, social and
governance matters and, in particular, their labour practices.
Principal Risks and Uncertainties
For the remaining six months of the year ending 31 March
2022
Emerging and Principal Risks
The Company's approach to risk governance, the risk review
process and risk appetite are set out in the Annual Report for the
year ended 31 March 2021 within the following sections; Risk and
Risk Management section in the Strategic Report and the Risk,
Internal Controls and Internal Audit section in the Corporate
Governance Statement, this can be found on our website
(nextenergysolarfund.com).
The Principal risks and uncertainties to the achievement of the
Company's objectives are described in the Annual Report and are
categorised as follows:
-- portfolio management and performance risks:
- electricity generation falling below expectations; and
- portfolio valuations.
-- external and market risks:
- adverse changes in government policy and political
uncertainty; and
- adverse changes to the regulatory framework for solar
plants;
- changes to tax legislation, health and safety legislation and
rates.
-- operational and strategic risks:
- a decline in the price of electricity; and
- counterparty risk; and
- plant operational risks.
The Board believes that the aforementioned risks are unchanged
with respect to the remaining six months of the year to 31 March
2022. The Board has identified the following emerging risks which
are being monitored on an ongoing basis:
-- the risk to the Company arising from the COVID-19 pandemic.
-- the recent changes to the Investment Policy having the
potential to change the portfolio's risk profile in terms of
geography and economic risk drivers.
-- the risk associated with the OFGEM reviews of subsidy
accreditations from the increased number of ongoing OFGEM audits;
and
-- the uncertainty surrounding the UK's developing relationship
with the EU post Brexit not limited to supply chain disruption and
regulation changes.
The inherent risks associated with investment in the solar
energy sector could result in a material adverse effect on the
Company's performance and the value of the ordinary shares.
Risks, including emerging risks, are mitigated and managed by
the Board through continual review, policy setting and regular
reviews of the Company's risk matrix by the Audit Committee to
ensure that procedures are in place with the intention of
minimising the impact of the principal risks to the achievement of
the Company's objectives. The Audit Committee undertook a formal
review of the Company's risk matrix at its meeting held on 19
November 2020. The Board and the Audit Committee rely on periodic
reports provided by the Investment Manager and the Administrator
regarding risks that the Company faces. When required, experts,
including tax advisers, legal advisers and environmental advisers,
are employed to gather information.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Interim Report
in accordance with applicable law and regulations.
In accordance with the FCA's Disclosure Guidance and
Transparency Rule 4.2.10R, the Directors confirm that, to the best
of their knowledge:
-- the Unaudited Condensed Interim Financial Statements have
been prepared in accordance with IAS 34 Interim Financial
Reporting;
-- the Interim Report, comprising the Chairman's Statement and
the Investment Adviser's Report, meet the requirements of an
interim management report and include a fair review of the
information required by:
- DTR4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
Unaudited Condensed Interim Financial description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place during the
first six months of the current financial year and that have
materially affected the financial position or performance of the
Company during that period and any changes in the related party
transactions described in the last Annual Report that could do
so.
The Board is responsible for the maintenance and integrity of
the corporate and financial information included on the Company's
website (nextenergysolarfund.com), and for the preparation and
dissemination of financial statements. Legislation in Guernsey
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
On behalf of the Board of Directors of NextEnergy Solar Fund
Limited
Kevin Lyon,
Chairman
18 November 2021
Independent Review Report to NextEnergy Solar Fund Limited
Conclusion
We have been engaged by NextEnergy Solar Fund Limited (the
"Company") to review the unaudited condensed interim financial
statements in the half-yearly financial report for the six months
ended 30 September 2020 of the Company which comprises the
unaudited condensed Statements of Comprehensive Income, Financial
Position, Changes in Equity, Cash Flows and the related explanatory
notes.
Based on our review, nothing has come to our attention that
causes us to believe that the unaudited condensed interim financial
statements in the half-yearly financial report for the six months
ended 30 September 2020 are not prepared, in all material respects,
in accordance with IAS 34 Interim Financial Reporting ("IAS 34")
and the Disclosure Guidance and Transparency Rules ("the DTR") of
the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the unaudited condensed interim financial
statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with International Financial
Reporting Standards. The directors are responsible for preparing
the unaudited condensed interim financial statements included in
the half-yearly financial report in accordance with IAS 34.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the unaudited condensed interim financial statements in the
half-yearly financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement letter to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Dermot Dempsey
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants, Guernsey
18 November 2020
Statement of Comprehensive Income (Unaudited Condensed)
For the six months ended 30 September 2021
All activities are derived from ongoing operations.
There is no other comprehensive income or expense apart from
those disclosed above and consequently a Statement of Other
Comprehensive Income has not been prepared.
The accompanying notes are an integral part of these condensed
interim financial statements.
Statement of Financial Position (Unaudited Condensed)
As at 30 September 2021
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Income
Income comprises:
Interest income 6,016 6,016 12,000
Investment income 18,887 22,022 38,868
Administrative services
income 5,051 4,539 9,128
Net c h a n ge s i n f
ai r v a lu e of i nv e
s t m e n t s 17 23,489 (915) (3,421)
T o t a l net income 53,443 31,662 56,575
E xpenditure
Preference share dividends 4,718 4,750 9,526
Management fees 5 2,499 2,565 5,157
Legal and professional
fees 316 331 716
Directors' fees 7 106 127 253
Administration fees 6 112 136 237
Other expenses 9 78 71 142
Audit fees 8 90 26 110
Charitable donation 10 - - 80
Regulatory fees 45 30 75
Insurance 12 13 55
Total expenses 7,976 8,049 16,351
Profit and comprehensive
income for the period/year 45,467 23,613 40,224
Earnings per ordinary share
- basic 14 7.74p 4.04p 6.87p
Earnings per ordinary share
- diluted 14 6.36p 3.71p 6.32p
30 September 30 September 31 March 2021
2021 (unaudited) 2020 (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
N on-current assets
Inv e stments 17 788,288 758,573 769,644
T o t a l non-current assets 788,288 758,573 769,644
Current assets
Ca sh and ca sh eq u ivale
n t s 4,318 11,491 10,809
Trade and other receivables 11 34,870 34,444 22,211
T o t a l current assets 39,188 45,935 33,020
Tot a l a ssets 827,476 804,508 802,664
Current liabilities
T r ade and other payables 12 (22,849) (23,118) (23,953)
T o t a l current liabilities (22,849) (23,118) (23,953)
N on-current liabilities
Pre f e ren ce sh a res 23 (197,989) (197,850) (197,920)
T o t a l non-current liabilities (197,989) (197,850) (197,920)
Net assets 606,638 583,540 580,791
Equity
S h are capi t al and p r
e m i um 13 607,193 604,631 605,938
Retained earnings (555) (21,091) (25,147)
Equity attributable to ordinary
shareholders 606,638 583,540 580,791
T ota l equity 606,638 583,540 580,791
N et assets per ordinary
share 16 103.1p 99.6p 98.9p
The accompanying notes are an integral part of these condensed
interim financial statements.
The audited financial statements were approved and authorised
for issue by the Board of Directors on 18 November 2021 and signed
on its behalf by:
Kevin Lyon Patrick Firth
Chairman Director
Statement of Changes in Equity (Unaudited Condensed)
For the six months ended 30 September 2021
Share capital Retained
and premium earnings Total equity
GBP'000 GBP'000 GBP'000
Ordinary shareholders' equity at
1 April 2021 605,938 (25,147) 580,791
Profit and comprehensive income
for the period - 45,467 45,467
Scrip shares issued in lieu of dividends 1,255 - 1,255
Ordinary dividends declared - (20,875) (20,875)
Ordinary shareholders' equity at
30 September 2021 607,193 (555) 606,638
Ordinary shareholders' equity at
1 April 2020 602,989 (24,360) 578,629
Loss and comprehensive income for
the period - 23,613 23,613
Scrip shares issued in lieu of dividends 1,642 - 1,642
Ordinary dividends declared - (20,344) (20,344)
Ordinary shareholders' equity at
30 September 2020 604,631 (21,091) 583,540
Ordinary shareholders' equity at
1 April 2020 602,989 (24,360) 578,629
Profit and comprehensive income
for the year - 40,224 40,224
Scrip shares issued in lieu of dividends 2,949 - 2,949
Ordinary dividends declared - (41,011) (41,011)
Ordinary shareholders' equity at
31 March 2021 605,938 (25,147) 580,791
Statement of Changes in Cash Flows (Unaudited Condensed)
For the six months ended 30 September 2021
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Ca sh flows used in operating
activities
Profit /(loss) and c om
p r e hens i v e i n c
om e/(loss) for t he year 45,467 23,613 40,224
Adj u s tments f o r :
Interest income receivable (6,016) (6,016) (12,000)
Interest income received 6,016 6,016 12,000
Investment income receivable (18,887) (22,022) (38,868)
Investment income received 20,083 11,672 41,164
Pr oceeds fr o m HoldCos 17 64,900 2,081 9,546
P ay ments to HoldCos 17 (38,549) (8,009) (29,051)
Payments to NPIII 17 (21,506)
Financing proceeds from
HoldCos - - 35,200
Financing proceeds returned
to HoldCos - - (35,200)
C h a n ge i n f ai r v
alue of i nv e s t men
t s 17 (23,489) 915 3,421
Fin a n cial debt amortisation 69 69 139
Dividends paid on preference
shares as finance costs 4,718 4,750 9,526
Operating cash flows before
movements in working capital 32,806 13,069 36,101
Cha nges in working capital
Movemen t i n t rade and
other r ecei v ab l e s (13,856) (101) (514)
Movemen t i n t rade and
other payables (1,112) (3,172) (2,344)
N et cash generated from
operating activities 17,838 9,796 33,242
Ca sh flows from financing
activities
Dividends paid on preference
shares (4,711) (4,724) (9,499)
Di v id en d s paid o n
or dina r y s ha r e s (19,618) (18,709) (38,062)
N et cash used in from
financing activities (24,329) (23,433) (47,561)
Ne t m o v e m e n t i
n ca sh and ca sh eq u
i v a l e n t s d ur i
n g period/year (6,491) (13,637) (14,319)
Ca sh and ca sh eq u i
v a l e n t s at t he begi
nn i n g of t he period/year 10,809 25,128 25,128
Ca sh and cash equivalents
at the end of the period/year 4,318 11,491 10,809
The accompanying notes are an integral part of these condensed
interim financial statements.
Notes to the Financial Statements (Unaudited Condensed)
For the six months ended 30 September 2021
1. General Information
The Company was incorporated with limited liability in Guernsey
under the Companies (Guernsey) Law, 2008 on 20 December 2013 with
registered number 57739, and is regulated by the Guernsey Financial
Services Commission as a registered closed-ended investment
company. The registered office of the Company is 1, Royal Plaza,
Royal Avenue, St Peter Port, Guernsey, Channel Islands GY1 2HL.
The Company's ordinary shares are publicly traded on the London
Stock Exchange under a premium listing. The Company seeks to
provide ordinary shareholders with attractive risk-adjusted
returns, principally in the form of regular dividends, by investing
in a diversified portfolio of primarily UK and OECD based solar
energy infrastructure assets. The Company currently makes its
investments through HoldCos and SPVs which are directly or
indirectly wholly owned by the Company.
The Company has appointed NextEnergy Capital IM Limited as its
Investment Manager pursuant to the Management Agreement dated 18
March 2014. The Investment Manager is a Guernsey registered
company, incorporated under the Companies (Guernsey) Law, 2008 with
registered number 57740 and is licensed and regulated by the
Guernsey Financial Services Commission and is a member of the NEC
Group. The Investment Manager acts as the Alternative Investment
Fund Manager of the Company.
The Investment Manager has appointed NextEnergy Capital Limited
as its Investment Adviser pursuant to the Investment Advisory
Agreement dated 18 March 2014. The Investment Adviser is a company
incorporated in England with registered number 05975223 and is
authorised and regulated by the FCA.
2. Summary of Significant Accounting Policies
a) Basis of Preparation
The unaudited condensed interim financial statements for the six
months ended 30 September 2021 have been prepared in accordance
with IAS 34 Interim Financial Reporting and the FCA's Disclosure
Guidance and Transparency Rules. They have been prepared under the
historical cost convention with the exception of financial assets
held at fair value through profit and loss. The principal
accounting policies adopted are set out below. These accounting
policies and critical accounting estimates and judgments used in
preparing the unaudited condensed interim financial statements are
consistent with those used in the Company's latest audited
financial statements for the year ended 31 March 2021, with the
addition of note 4a regarding the valuation of the Company's
investment in NPIII.
The unaudited condensed interim financial statements are
unaudited but have been reviewed by the Company's Auditor, KPMG
Channel Islands Limited, in accordance with International Standard
of Review Engagements 2410 (UK & Ireland), Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity and were approved for issue on 18 November 2021.
The unaudited condensed interim financial statements do not
include all information and disclosures required in the annual
financial statements and should be read in conjunction with the
Company's audited financial statements for the year ended 31 March
2021, which were prepared in accordance with IFRS and the FCA's
Disclosure Guidance and Transparency Rules.
b) Going Concern
The Company owns a portfolio of solar energy infrastructure
assets in the UK and Italy that are predominantly fully
constructed, operational and generating renewable electricity. A
significant proportion of the income from the Company's investments
is fixed for a long period of time in accordance with the terms of
the relevant ROC or FiT subsidy. The balance of the income has
exposure to wholesale electricity prices, although the Investment
Manager seeks to reduce this exposure through entering into short-
or long-term power purchase agreements with fixed price
mechanisms.
The Directors have reviewed the current and projected financial
position of the Company making reasonable assumptions about future
performance. The key areas reviewed were:
-- maturity of debt facilities;
-- future investment transactions;
-- expenditure commitment; and
-- forecast income and cash flows.
The Company's cash balance as at 30 September 2021 was GBP4.3m,
all of which was readily available. It also had immediately
available but undrawn amounts under its debt facilities of a
further GBP93.4m. The NESF Group had capital commitments totalling
GBP59.5m at the reporting date. The majority of the NESF Group's
revenues are derived from government subsidies. A significant part
of the NESF Group's borrowings are on a non-recourse basis. The
Company's portfolio is diversified by geographical, components,
plant size, subsidy schemes and revenue streams.
The Board is satisfied that the Company has sufficient financial
resources available to be able to manage the Company's business
effectively and pursue the Company's principal activities and
investment objective. In particular, the Board is not currently
aware of any material uncertainties in relation to the Company's
ability to continue for a period of at least 12 months from the
date of approval of this Annual Report. The Board is of the
opinion, therefore, that the going concern basis adopted in the
preparation of the Financial Statements is appropriate.
c) Basis of Non-Consolidation
The Company has set up/acquired SPVs through its investment in
the holding companies. The Company meets the definition of an
investment entity as described by IFRS 10. Under IFRS 10 investment
entities are required to hold subsidiaries at fair value through
profit or loss rather than consolidate them. There are five holding
companies (NextEnergy Solar Holdings Limited, NextEnergy Solar
Holdings II Limited, NextEnergy Solar Holdings III Limited,
NextEnergy Solar Holdings IV Limited and NextEnergy Solar Holdings
V Limited, collectively the "HoldCos"). The HoldCos are also
investment entities and, as required under IFRS 10, value their
investments at fair value.
Under the definition of an investment entity, the entity should
satisfy all three of the following tests:
-- obtains funds from one or more investors for the purpose of
providing these investors with investment management services;
and
-- commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation;
investment income, or both (including having an exit strategy for
investments); and
-- measures and evaluates the performance of substantially all
of its investments on a fair value basis. In assessing whether the
Company meets the definition of an investment entity set out in
IFRS 10, the Directors note that:
-- the Company is an investment company that invests funds
obtained from multiple investors in a diversified portfolio of
solar energy infrastructure assets and related infrastructure
assets and has appointed the Investment Manager to manage the
Company's investments;
-- The Company's purpose is to invest funds for investment
income and potential capital appreciation and will exit its
investments at the end of their economic lives or when their
planning permissions or leasehold land interests expire (unless it
has repowered their sites) and may also exit investments earlier
for reasons of portfolio balance or profit; and
-- The Board evaluates the performance of the Company's
investments on a fair value basis as part of the quarterly
management accounts review and the Company values its investments
on a fair value basis twice a year for inclusion in its annual and
interim financial statements with the movement in the valuations
taken to the Income Statement and, therefore, is measured within
its earnings.
Taking these factors into account, the Directors are of the
opinion that the Company has all the typical characteristics of an
investment entity and meets the definition set out in IFRS 10.
The Directors believe the treatment outlined above provides the
most relevant information to investors.
d) Segmental Reporting
IFRS 8 Operating Segments requires a "management approach" under
which segment information is presented on the same basis as that
used for internal reporting purposes.
The Chief Operating Decision Maker, which is the Board, is of
the opinion that the Company is engaged in a single segment of
business, being investment in solar energy infrastructure assets
via its HoldCos and SPVs. Therefore, the financial information used
by the Chief Operating Decision Maker to allocate resources and
manage the Company presents the business as a single segment.
e) Seasonal reporting
The Company's results may vary during reporting periods as a
result of a fluctuation in the levels of sunlight during the period
and, together with other factors, will impact the NAV. Other
factors including changes in inflation and power prices.
f) Functional and presentational currency
The financial information is presented in pounds sterling
("GBP") because that is the currency of the primary economic
environment in which the Company operates.
3. New and Revised Standards
a) New and Revised IFRSs Adopted by the Company
The Directors have assessed all new standards and amendments to
standards and interpretations which are effective for annual
periods commencing on or after 1 April 2020 and noted no material
impact on the Company.
b) New and revised IFRSs in Issue but not yet Effective
The Directors have considered new standards and amendments to
standards and interpretations in issue and effective for annual
periods commencing after 1 April 2021 and do not expect that their
adoption will result in a material impact on the financial
statements of the Company in future periods.
4. Critical Accounting Estimates and Judgements
The Company makes estimates and assumptions that affect the
reported amounts of assets and liabilities. Estimates and
judgements are continually evaluated and based on historic
experience and other factors believed to be reasonable under the
circumstances.
a) Critical Accounting Estimate: Investments at Fair Value
Through Profit or Loss
The Company's investments are measured at fair value for
financial reporting purposes. The Board has appointed the
Investment Manager to produce investment valuations based on
projected future cash flows. These valuations are reviewed and
approved by the Board. The investments are held through SPVs.
IFRS 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. Fair
value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The Board
bases the fair value of the investments on the information received
from the Investment Manager.
The Company classified its investments at fair value through
profit or loss as level 3 within the fair value hierarchy. Level 3
investments. As at
30 September 2021 level 3 investments amount to GBP788.3m (30
September 2020: GBP758.6m, 31 March 2021: GBP769.6m) and consist of
one Private Equity Solar fund investment (NP III) which has been
valued using estimated attributable NAV and 99 (30 September 2020:
90,
31 March 2021: 94) investments in solar PV plants all of which
have been valued on a look through basis based on the discounted
cash flows of the solar assets (except for those solar assets not
yet operational) and the residual value of net assets at the
HoldCos level.
The discount rate is a significant Level 3 input and a change in
the discount applied could have a material effect on the value of
the investments. In addition, Covid-19 has had a negative impact on
the long-term power price projections, which is also a significant
Level 3 input. Investments in solar assets that are not yet
operational are held at fair value, where the cost of the
investment is used as an appropriate approximation of fair value.
Level 3 valuations are reviewed regularly by the Investment Manager
who reports to the Board on a periodic basis. The Board considers
the appropriateness of the valuation model and inputs, as well as
the valuation result.
Information about the unobservable inputs used at 30 September
2021 in measuring financial instruments categorised as Level 3 in
the fair value hierarchy and their sensitivities are disclosed in
note 19. Unlisted investments reconcile to the "Total investments
at fair value" in the table in note 17.
b) Significant Judgement: Consolidation of Entities
The Company, under the investment entity exemption rule, holds
its investments at fair value. The Company meets the definition of
an investment entity per IFRS 10 as detailed in note 2c).
The Company does not have any other subsidiaries other than
those determined to be controlled subsidiary investments.
Controlled subsidiary investments are measured at fair value
through profit or loss and are not consolidated in accordance with
IFRS 10. The fair value of controlled subsidiary investments is
determined as described in note 17.
The Company and the HoldCos operate as an integrated structure
whereby the Company invests both in the HoldCos and a singular
direct investment. Under IFRS 10, there is a requirement for the
Board to assess whether the HoldCos are themselves investment
entities. The Board has performed this assessment and concluded
that each of the HoldCos is an investment entity for the following
reasons:
-- the HoldCos have obtained funds for the purpose of investing
in equity or other similar interests in multiple investments and
providing the Company (and its investors) with investment income;
and
-- the performance of investments made through the HoldCos are
measured and evaluated on a fair value basis.
Furthermore, the HoldCos themselves are not deemed to be
operating entities providing services to the Company and,
therefore, are able to apply the exemption to consolidation.
5. Management Fees
The Investment Manager is entitled to receive an annual fee,
accruing daily and calculated on a sliding scale, as follows
below:
-- 1% of NAV up to GBP200m;
-- 0.9% of NAV above GBP200m and up to and including GBP300m; and
-- 0.8% of NAV above GBP300m.
The NAV for the purpose of calculation, is reduced by an amount
equivalent to US$50m for NESF's investment in NPII. For the six
months ended
30 September 2021 the Company incurred GBP2.5m in management
fees (six months ended 30 September 2020: GBP2.6m; year ended
31 March 2021: GBP5.2m), of which GBPnil was outstanding at 30
September 2021 (30 September 2020: GBPnil; 31 March 2021:
GBPnil).
6. Administration Fees
Under an Administration Agreement, for the period ended 30
September 2021 the Administrator was entitled to receive a minimum
annual fee, accruing daily and calculated on a sliding scale, as
follows:
-- 0.06% of NAV up to GBP150m;
-- 0.03% of NAV above GBP150m and up to and including GBP200m; and
-- 0.025% of NAV above GBP200m.
Pursuant to an amendment to the Administration Agreement, the
administration fee was changed to a fixed fee of GBP220k per annum
with effect from 1 October 2020.With effect from 1 January 2022,
the fixed fee will increase annually in line with the annual
increase in Guernsey RPI.
For periods up to 30 September 2021, the Administrator was also
entitled to additional fees for attendance at ad hoc Board and
Board Committee meetings.
For the six months ended 30 September 2021 the Administrator was
entitled to administration fees of GBP112k (six months ended 30
September 2020: GBP136k; year ended 31 March 2021 GBP237k), of
which GBP56k was outstanding at 31 March 2021 (30 September 2020:
GBP68k; 31 March 2021: GBP57k).
The fee is payable quarterly in arrears.
7. Directors' Fees
The Directors are all non-executive and their remuneration is
solely in the form of fees. The Directors' fees for the period were
GBP106k (six months ended 30 September 2020: GBP127k; year ended 31
March 2021 GBP253k), of which GBPnil was outstanding at 30
September 2021 (30 September 2020: GBPnil; 31 March 2021:
GBPnil).
8. Audit Fees
The analysis of the auditor's remuneration is as follows:
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Fees payable to the auditor
for the interim review and audit
of the Company 90 26 110
Total 90 26 110
9. Other Expenses
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Amortisation expense 69 69 139
Sundry expenses 9 44 2
Director's expenses - 1 1
Total 78 114 142
10. Charitable Donation
During the period ended 30 September 2021, the Company made a
charitable donation of GBPnil (six months ended 30 September 2020:
GBPnil; year ended 31 March 2021: GBP80k). Information on the
NextEnergy Foundation can be found in the 2021 Annual Report,
which, can also be found on our website
(nextenergysolarfund.com).
11. Trade and Other Receivables
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Administrative service fee income
receivable 2,041 339 759
Prepayments 46 36 29
Due from HoldCos 32,783 34,069 21,423
Total trade and other receivables 34,870 34,444 22,211
Amounts due from HoldCos are interest free and payable on
demand.
12. Trade and Other Payables
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Other payables 228 136 142
Preference dividends payable 2,395 2,388 2,388
Due to HoldCos 20,226 20,594 21,423
Total trade and other payables 22,849 23,118 23,953
Amounts due to HoldCos are interest free and payable on
demand.
13. Share Capital and Reserves
a) Ordinary Shares
The share capital of the Company comprises solely of ordinary
shares of no par value and preference shares of no par value.
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Issued ordinary shares GBP'000 GBP'000 GBP'000
Opening balance 586,987,678 584,205,931 584,205,931
Scrip shares issued during the
period/year 1,246,447 1,538,598 2,781,747
Closing balance 588,234,125 585,744,529 586,987,678
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Issued ordinary shares - share
premium GBP'000 GBP'000 GBP'000
Opening balance 605,938 602,989 602,989
Value of scrip shares issued during the period/year 1,255 1,642 2,949
Closing balance 607,193 604,631 605,938
All the holders of the ordinary shares are entitled to receive
dividends as declared from time to time. At any general meeting of
the Company, each ordinary shareholder will have, on a show of
hands, one vote and, on a poll, one vote in respect of each
ordinary share held.
b) Preference Shares
In accordance with International Accounting Standard 32, the
preference shares are classified as liabilities. Details of the
preference shares can be found in note 23.
c) Retained Reserves
Retained reserves comprise the retained earnings as detailed in
the Statement of Changes in Equity.
Under Guernsey law, the Company can pay dividends in excess of
its retained earnings provided it satisfies the solvency test
prescribed by the Companies (Guernsey) Law, 2008. The solvency test
considers whether the Company is able to pay its debts when they
fall due, and whether the value of the Company's assets is greater
than its liabilities. The Company satisfied the solvency test in
respect of all dividends declared or paid in the year.
14. Earnings per Ordinary Share
a) Basic
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Pro t and comprehensive income for
the period/year (GBP'000) 45,467 23,613 40,224
Weighted average number of issued
ordinary shares 587,566,139 584,679,032 585,423,190
Earnings per share basic 7.74p 4.04p 6.87p
Diluted
From 1 April 2036 the preference shares have the right to
convert, based on 100p per preference share and the NAV per
ordinary share at the time of conversion. into new ordinary shares
or a new class of unlisted B shares with dividend and capital
rights ranking pari passu with the ordinary shares.
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Pro t and comprehensive income for
the period/year (GBP'000) 45,467 23,613 40,224
Plus: preference share dividends
paid during the period/year (GBP'000) 4,718 4,750 9,526
Pro t for the period/year attributable
to ordinary shareholders (GBP'000) 50,185 28,363 49,750
Weighted average number of issued
ordinary shares 587,566,139 584,679,032 585,423,190
Plus: weighted number of ordinary
shares issuable on any conversion
of preference shares, based on the
NAV per ordinary share as at the
period/year end 202,020,202 180,751,036 202,020,202
Adjusted weighted average number
of ordinary shares 790,254,327 765,430,068 787,443,392
Earnings per share diluted 6.36p 3.71p 6.32p
15. Ordinary Share Dividends
Paid During the year
Six months Six months Year ended Year ended
ended Six months ended Six months 31 March 31 March
30 September ended 30 September ended 2021 2021
2021 30 September 2020 30 September
2021 Pence 2020 Pence Pence
GBP'000 per share GBP'000 per share GBP'000 per share
Quarter
1 10,346 1.7625 10,034 1.7175 10,034 1.7175
Quarter
2 10,527 1.7900 10,310 1.7625 10,310 1.7625
Quarter
3 N/a N/a N/a N/a 10,324 1.7625
Quarter
4 N/a N/a N/a N/a 10,343 1.7625
Total 20,873 3.5525 20,344 3.4080 41,011 7.005
Declared in Respect of the year
Six months Six months Year ended Year ended
ended 30 Six months ended 30 Six months 31 March 31 March
September ended 30 September ended 30 2021 2021
2021 September 2020 September
2021 Pence 2020 Pence Pence per
GBP'000 per share GBP'000 per share GBP'000 share
Quarter 1 10,527 1.79 10,310 1.7625 10,310 1.7625
Quarter 2 N/a 1.79 10,324 1.7625 10,324 1.7625
Quarter 3 N/a N/a N/a N/a 10,343 1.7625
Quarter 4 N/a N/a N/a N/a 10,346 1.7625
Total 10,527 3.5800 20,634 3.5250 41,323 7.0700
16. Net Assets per Ordinary Share
30 September 30 September 31 March
2021 2020 2021
Ordinary shareholders' equity
(GBP'000) 606,638 583,540 580,791
Number of issued ordinary shares 588,234,125 585,744,529 586,987,678
Net assets per ordinary share 103.1p 99.6p 98.9p
17. Investments at Fair Value Through Profit or Loss
The Company owns its portfolio of solar assets through its
investments in HoldCos and a direct investment in NPIII. The
Company's investments comprise its portfolio of solar assets and
the residual net assets of the HoldCos. As explained in note 4a),
all of the Company's investments are held at fair value through
profit or loss and classified as Level 3 in the fair value
hierarchy. There were no movements between the hierarchy Levels
during the period ended 30 September 2021(six months ended 30
September 2020: none, year ended 31 March 2021: none).
The Company's total investments at fair value are recorded under
"Non-current assets" in the Statement of Financial Position.
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Brought forward cost of investments 815,494 795,989 795,989
Investment proceeds from HoldCos (64,900) (2,081) (9,546)
Investment payments to HoldCos 38,549 8,009 29,051
Investment payments to NPIII 21,506 - -
Carried forward cost of investments 810,649 801,917 815,494
Brought forward unrealised losses
on valuation (45,850) (42,429) (42,429)
Movement in unrealised gains/(losses)
on valuation 23,489 (915) (3,421)
Carried forward unrealised losses
on valuation (22,361) (43,344) (45,850)
Total investments at fair value 788,288 758,573 769,644
The total change in the value of the investments in the HoldCos
is recorded through profit and loss in the Statement of
Comprehensive Income. Information about the principal unobservable
inputs used in valuing the Company's investments and their
sensitivities is included in note 19. To facilitate the acquisition
of the Camden portfolio, GBP35.2m was drawn down at subsidiary
level, remitted to the Company before being returned to a
subsidiary in the year ended 31 March 2021.
18. Subsidiaries
The Company holds investments through subsidiary companies (the
HoldCos) which have not been consolidated as a result of the
adoption of IFRS 10: Investment entities exemption to
consolidation. The Company holds its investment of NPIII directly.
As stated in note 4c), the HoldCos are incorporated in the UK and
100% directly owned. There are no cross guarantees amongst Group
entities. During the period the Company invested in Camilla Battery
Storage Limited with another Company, management have assessed the
substance of this investment and have conclude that it meets the
control requirements of IFRS 10 Consolidated Financial Statements
and is therefore treated a subsidiary not a joint venture as per
IFRS 11 Investments in Associates and Joint Ventures. Below is the
legal entity name for the SPVs, all owned 100% at 30 September 2021
directly or indirectly through the HoldCos listed below.
Country of Country of
Name incorporation Name incorporation
N e xt E n e r g y S ola r Holdin g s Li m it
ed UK
BL Solar 2 Limited UK North Farm Solar Park Limited UK
Bowerhouse Solar Limited UK Push Energy (Birch) Limited UK
Ellough Solar 2 Limited UK Push Energy (Boxted Airfield) Limited UK
Glebe Farm SPV Limited UK Push Energy (Croydon) Limited UK
Glorious Energy Limited UK Push Energy (Decoy) Limited UK
Greenfields (A) Limited UK Push Energy (Hall Farm) Limited UK
NESF-Ellough Ltd UK Push Energy (Langenhoe) Limited UK
Nextpower Ellough LLP UK SSB Condover Limited [(Condover)] UK
Nextpower Gover Farm Limited UK ST Solarinvest Devon 1 Limited UK
Nextpower Higher Hatherleigh UK Sunglow Power Limited UK
Nextpower Shacks Barn Ltd UK Wellingborough Solar Limited UK
NextEnergy Solar Holdings II Limited UK
ESF Llwyndu Limited UK Trowbridge PV Ltd UK
NextEnergy Solar Holdings III Limited UK
Balhearty Solar Limited UK Burcroft Solar Parks Ltd UK
Ballygarvey Solar Ltd UK Burrowton Farm Solar Park Ltd UK
BESS Pierces Ltd UK Camilla Battery Storage Limited UK
Birch Solar Farm CIC UK Chilton Cantello Solar Park Ltd UK
Blenches Mill Farm Solar Park Ltd UK Crossways Solar Park Ltd UK
Brafield Solar Limited UK Empyreal Energy Limited UK
Francis Lane Solar Limited UK Fiskerton Limited UK
Gourton Hall Solar Limited UK Nextpower SPV 10 Ltd UK
Greenfields (T) Limited UK Nextpower Water Projects Ltd UK
Gwent Farmers' Community Solar Partnership
Limited UK PF Solar Limited UK
Helios Solar 1 Limited UK Pierces Solar Limited UK
Helios Solar 2 Limited UK Raglington Farm Solar Park Ltd UK
High Garret UK Renewable Energy HoldCo Ltd UK
Hook Valley Farm Solar Park Ltd UK RRAM (Portfolio 2) Ltd UK
Knockworthy Solar Park Ltd UK RRAM (Portfolio One) Ltd UK
Lark Energy Bilsthorpe Ltd UK RRAM Energy Limited UK
Le Solar 51 Limited UK Saundercroft Farm Solar Park Ltd UK
Little Irchester Solar Limited UK SL Solar Services Ltd UK
Little Staughton Airfield Solar Limited UK Sywell Solar Limited UK
Micro Renewables Domestic Ltd UK Temple Normanton Solar Limited UK
Micro Renewables Ltd UK TGC Solar Radbrook Ltd UK
Moss Farm Solar Limited UK Thornborough Solar Limited UK
Moss Lane Farm Solar Limited UK Nextpower SPV 9 Ltd UK
NESH 3 Portfolio A Limited UK Nextpower South Lowfields UK
Nextpower Bosworth Ltd UK Thurlestone-Leicester Solar Limited UK
Nextpower Grange UK UK Solar (Fiskerton) LLP UK
Nextpower Higher Farm Ltd UK Warmingham Solar Limited UK
NextPower High Garrett Ltd UK Wheb European Solar (UK) 2 Ltd UK
Nextpower Hops Energy UK Wheb European Solar (UK) 3 Ltd UK
Nextpower Eelpower Ltd UK Whitley Solar Park (Ashcott Farm) Ltd UK
Nextpower SPV 4 Ltd UK Wickfield Solar Ltd UK
Nextpower SPV 5 Ltd UK Wyld Meadow Farm UK
Nextpower SPV 6 Ltd UK
NextZest Ltd
NextEnergy Solar Holdings IV Limited UK
Berwick Solar Park Limited UK Emberton Solar Park Limited UK
Bottom Plain Solar Park Limited UK Great Wilbraham Solar Park Limited UK
Branston Solar Park Limited UK Nextpower Radius Limited UK
NextEnergy Solar Holdings V Limited UK
Agrosei S.r.l Italy Starquattro S.r.l Italy
Fotostar 6 S.r.l Italy SunEdison Med. 6 S.r.l Italy
Macchia Rotonda Solar S.r.l Italy
NextEnergy Solar Holdings VI Limited UK
Bowden Lane Solar Park Ltd UK Green End Renewables Limited UK
Fenland Renewables Limited UK Tower Hill Farm Renewables Limited UK
19. Fair Value of Investment in Unconsolidated Subsidiaries
a) Valuation process
The valuation process is described in note 4a.
The Directors and the Investment Manager consider that the
discounted cash flow methodology used in deriving the fair value of
investments in operating solar plants is in accordance with the
fair value requirements of IFRS 13 and that the valuation
methodology used, including the key estimates and assumptions
applied, is appropriate. As at 30 September 2021, investments held
at fair value using the discounted cash flow methodology totalled
GBP759.9m (30 September 2020: GBP741.4m, 31 March 2021:
GBP740.3m).
During the period the Company invested directly in a private
equity fund NextPower III LP. The fair value of the Company's
investment in private equity funds is generally considered to be
the Company's attributable portion of the NAV of the private equity
fund, as determined by the general partner/manager of such funds,
adjusted if considered necessary by the Board of Directors,
including any adjustment necessary for carried interest. The Board
of Directors and the Investment Manager consider the IPEV
guidelines when valuing private equity fund investments. As at 30
September 2021, investments held at fair value using NAV totalled
GBP18.8m (30 September 2020: GBPnil, 31 March 2021: GBPnil).
Investments in assets that are not yet operational are also held
at fair value, where the cost of the investment is used as an
appropriate approximation of fair value. These investments are not
included in the sensitivity analyses. As at 30 September 2021,
investments held at fair value using the cost methodology totalled
GBP9.6m (30 September 2020: GBP17.2m, 31 March 2021: GBP29.3m).
b) Sensitivity Analyses of Changes in Significant Unobservable
Inputs to the Discounted Cash Flow Calculation
Most of the Company's investments are valued using the
discounted cash flow methodology. Information on this methodology
is included in note 4a). The Directors consider the following to be
significant unobservable inputs to the discounted cash flows
calculation on a look through basis.
Discount Rates
Discount rates used in the valuation of the Company's
investments represent the Investment Adviser's and Board's
assessment of the rate of return in the market for assets with
similar characteristics and risk profile.
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Weighted average discount rate 6.3% 6.8% 6.3%
Range of discount rates (unlevered 5.75% to 6.25% to 5.75% to
to levered) 7.25% 7.75% 7.25%
Premium applied to cash flows earned
30 years after grid connection date 1.0% 1.0% 1.0%
The table below shows the sensitivity of the portfolio valuation
to a change to the weighted average discount rate by plus or minus
0.5%, with all other variables held constant.
Discount rate sensitivity +0.5% change Investments -0.5% change
30 September 2021
Directors' valuation (GBP20.5m) GBP788.3m GBP22.1m
Directors' valuation - percentage
movement (3.0%) 3.3%
Change in NAV per ordinary share (3.1p) 3.4p
30 September 2020
Directors' valuation (GBP18.4m) GBP758.6m GBP19.7m
Directors' valuation - percentage
movement (3.2%) 3.4%
Change in NAV per ordinary share (3.1p) 3.4p
31 March 2021
Directors' valuation (GBP20.6m) GBP769.6m GBP22.3m
Directors' valuation - percentage
movement (3.4%) 3.7%
Change in NAV per ordinary share (3.5p) 3.8p
Power Price
As at 30 September 2021, estimates implied an average rate of
decline of UK electricity prices (2021-2041) of approximately -1.4%
(30 September 2020: 0.44%; 31 March 2021: 0.1%) in real terms and a
long-term inflation rate of 2.5% (30 September 2020: 3.0%, 31 March
21 3.0%).
The impact of Covid-19 on 2020 power prices was seen to reverse
during 2021 and the blended average of the "central case" scenarios
has been applied to the valuation. It is prudent to consider the
range of power price forecasts and provide transparency on the
impact.
The table below shows the sensitivity of the portfolio valuation
to a sustained decrease or increase in the power price by minus or
plus 10% on the valuation, with all other variables held
constant.
Power price sensitivity -10% change Investments +10% change
30 September 2021
Directors' valuation (GBP45.2m) GBP788.3m GBP43.0m
Directors' valuation - percentage
movement (6.7%) 6.4%
Change in NAV per ordinary share (6.9p) 6.6p
30 September 2020
Directors' valuation (GBP42.5m) GBP758.6m GBP41.0m
Directors' valuation - percentage
movement (7.4%) 7.2%
Change in NAV per ordinary share (7.3p) 7.1p
31 March 2021
Directors' valuation (GBP42.2m) GBP769.6m GBP40.9m
Directors' valuation - percentage
movement (6.9%) 6.7%
Change in NAV per ordinary share (7.2p) 7.0p
Energy Generation
The portfolios aggregate energy generation yield depends on the
combination of solar irradiation and technical performance of the
solar assets. The table below shows the sensitivity of the
portfolio valuation to a sustained decrease or increase of energy
generation by minus or plus 5% on the valuation, with all other
variables held constant.
Energy generation sensitivity -0.5% underperformance Investments +0.5% outperformance
30 September 2021
Directors' valuation (GBP42.8m) GBP788.3m GBP42.2m
Directors' valuation - percentage
movement (6.4%) 6.3%
Change in NAV per ordinary share (6.6p) 6.5p
30 September 2020
Directors' valuation (GBP40.8m) GBP758.6m GBP39.7m
Directors' valuation - percentage
movement (7.1%) 6.9%
Change in NAV per ordinary share (7.0p) 6.8p
31 March 2021
Directors' valuation (GBP40.4m) GBP769.6m GBP39.6m
Directors' valuation - percentage
movement (6.6%) 6.5%
Change in NAV per ordinary share (6.9p) 6.8p
Inflation Rates
The portfolio valuation assumes long-term inflation of 2.5% (30
September 2020: 3.0%; 31 March 2021: 3.0%) p.a. for investments
(based on UK RPI).
The table below shows the sensitivity of the portfolio valuation
to a change to the inflation rate by minus or plus 0.5%, with all
other variables held constant.
Inflation rate sensitivity -0.5% change Investments +0.5% change
30 September 2021
Directors' valuation (GBP27.4m) GBP788.3m GBP29.5m
Directors' valuation - percentage movement (4.1%) 4.4%
Change in NAV per ordinary share (4.2p) 4.5p
30 September 2020
Directors' valuation (GBP28.0m) GBP758.6m GBP29.5m
Directors' valuation - percentage movement (4.9%) 5.1%
Change in NAV per ordinary share (4.8p) 5.0p
31 March 2021
Directors' valuation (GBP30.6m) GBP769.6m GBP28.8m
Directors' valuation - percentage movement (4.7%) 5.0%
Change in NAV per ordinary share (4.9p) 5.3p
Operating Costs
The table below shows the sensitivity of the portfolio to
changes in operating costs by plus or minus 10% at the SPVs level,
with all other variables held constant.
Operating costs sensitivity +10% change Investments -10% change
30 September 2021
Directors' valuation (GBP13.1m) GBP788.3m GBP13.1m
Directors' valuation - percentage
movement (2.0%) 2.0%
Change in NAV per ordinary share (2.0p) 2.0p
30 September 2020
Directors' valuation (GBP8.8m) GBP758.6m GBP8.8m
Directors' valuation - percentage
movement (1.5%) 1.5%
Change in NAV per ordinary share (1.5p) 1.5p
31 March 2021
Directors' valuation (GBP11.9m) GBP769.6m GBP11.8m
Directors' valuation - percentage
movement (2.0%) 1.9%
Change in NAV per ordinary share (2.0p) 2.0p
Tax Rates
The UK corporation tax rate used in the portfolio valuation is
19% until 2023 and 25% thereafter (30 September 2020: 19%; 31 March
2021: 19% until 2023 and 25% thereafter), in accordance with the
latest UK Budget announcements.
20. Non-investment Financial Assets and Liabilities
Cash and cash equivalents are Level 1 items in the fair value
hierarchy.
Current assets and current liabilities are Level 2 items in the
fair value hierarchy, with their carrying value being approximates
for their fair values as these are short-term items.
The preference shares are held at amortised cost using the
effective interest method and are measured at gross proceeds net of
transaction costs incurred, as at September 2021 they are held at
GBP197.9m (30 September 2020: GBP197.9m, 31 March 2021: GBP197.9m).
The transaction costs are amortised over the expected life of the
preference shares to 2036. And the carrying value of the preference
shares approximate their fair value as at 30 September 2021.
21. Capital Management
a) Capital Structure
The NESF Group, which comprises the Company and its
unconsolidated subsidiaries (being the direct investment in NPIII,
HoldCos and SPVs), manages its capital to ensure that it will be
able to continue as a going concern whilst maximising the return to
ordinary shareholders through the optimisation of the debt and
equity balances. The NESF Group's principal use of cash has been to
fund investments in accordance with the Company's Investment Policy
as well as ongoing operational expenses.
The capital structure of the Company consists entirely of equity
(comprising issued ordinary share capital and retained earnings)
and preference share capital (which, for accounting purposes, are
treated as a liability). The capital structure of each of the
Company's subsidiaries consists entirely of equity or a combination
of equity and debt, which may be short- or long-term. The Board,
with the assistance of the Investment Adviser, monitors and reviews
the NESF Group's capital structure on an ongoing basis.
b) Debt
The Company's Investment Adviser reviews the debt structure of
the Company and its subsidiaries on an ongoing basis. The Company
and its subsidiaries use leverage for financing the acquisition of
solar investments and working capital purposes. In accordance with
the Company's Investment Policy, the NESF Group may employ
leverage, provided that it does not exceed (at the time the
relevant arrangement is entered into) 50% of GAV. For this purpose,
leverage includes all short- and long-term debt raised by the
Company or any of its subsidiaries, as well as the aggregate
subscription monies paid in respect of all preference shares in
issue and any unpaid dividends due in respect of the preference
shares.
As at 30 September 2021, the Company had GBP200m of preference
shares in issue (30 September 2020: GBP200m; 31 March 2021:
GBP200m) and no financial debt outstanding. The subsidiaries had
GBP282.8m in long-term debt, look through debt and revolving credit
facilities outstanding (30 September 2020: GBP212.6m; 31 March
2021: GBP246.3m) (see note 22.b), representing a gearing level of
44% (30 September 2020: 41%; 31 March 2021: 43%).
22. Financial Risk Management Objectives
The Board, with the assistance of the Investment Manager and
Investment Adviser, monitors and manages the financial risks
relating to the operations of the NESF Group through an internal
risk map and the Investment Manager's reports. These risks include
capital risk, market risk (including price risk, power price risk,
currency risk and interest rate risk), credit risk and liquidity
risk. The objective of the risk management programme is to minimise
the potential adverse effects on the financial performance of the
NESF Group.
For the Company and its subsidiaries, financial risks are
managed by the Investment Manager and Investment Adviser, which
operate within Board-approved policies. The various types of
financial risk which affect the Company, its subsidiaries or both
are managed as described below. Risks that affect the Company's
unconsolidated subsidiaries may affect in turn the fair value of
investments held by the Company.
a) Capital Risk (Company Only)
The Company has put in place a financing structure that enables
it to manage its capital effectively. The Company's capital
structure comprises equity (issued ordinary share capital and
retained earnings) and preference share capital. As at 30 September
2021 the Company had no recourse financial debt, although the
Company is a guarantor for two financing and hedging facilities of
its subsidiaries (see note 25).
b) Market Price Risk (Company and Subsidiaries)
Market price risk is the risk that the fair value of future cash
flows of a financial instrument held by the Company, through its
subsidiaries, will fluctuate because of changes in market prices.
Changes in market prices will affect the discount rate applied to
the expected future cash flows from the Company's investments and,
therefore, the fair value of those investments. The impact of
changes in the discount rate is considered in note 19.
Power Price Risk (Company and Subsidiaries)
The wholesale market price of electricity is volatile and is
affected by multiple factors, including demand for electricity, the
generation across the entire grid and government subsidies, as well
as fluctuations in the market prices of fuel commodities and
foreign exchange. Whilst some of the Company's investments benefit
from subsidies and short-term PPA hedges that fix prices, other
revenue streams are not hedged and subject to wholesale electricity
prices.
A decrease in economic activity in the UK or Italy, as during
the Covid-19 period, could result in a decrease in demand for
electricity in the market. Short-term and seasonal fluctuations in
electricity demand could also impact the price at which the
subsidiaries can sell electricity. Supply of electricity can be
affected by new entrants to the wholesale power market.
The Investment Adviser monitors these factors and hedges the
price at which the subsidiaries sell electricity as necessary.
Currency Risk (Company and NESH V)
Foreign currency risk, as defined in IFRS 7, arises as the
values of recognised monetary assets and monetary liabilities
denominated in other currencies fluctuate due to changes in foreign
exchange rates. The Company has no direct exposure to currency risk
as all its assets and liabilities are in pounds sterling, the
Company's functional and presentational currency. A substantial
majority of the cash flows from the Company's solar assets in Italy
to NESH V are hedged and so the cash flows to the Company from that
HoldCo are exposed to limited currency risk and therefore the
currency risk on the value of the assets is not considered to be
significant.
Interest Rate Risk (Company and Subsidiaries)
The Company is indirectly exposed to interest rate risk from the
credit facilities of the HoldCos, as at 30 September 2021 of the
GBP268.6m (30 September 2020: GBP212.6m; 31 March 2021: GBP246.3m)
credit facilities outstanding, GBP117.5m (30 September 2020:
GBP121.2m; 31 March 2021: GBP119.6m) had fixed interest rates and
the remaining GBP151.1m (30 September 2020: GBP91.5m; 31 March
2021: GBP126.7m) had floating interest rates. For the floating
amount, interest rate swaps were implemented over the term of the
loans to mitigate interest rate risks for GBP72.0m (30 September
2020: GBP72.6m; 31 March 2021: GBP72.6m). The counterparties to
these swaps are all Investment grade financial institutions. The
remaining GBP79.1m (30 September 2020: GBP18.9m; 31 March 2021:
GBP54.1m) had floating rates which are not hedged and are not
considered by the Directors to be significant.
c) Credit Risk (Company and Subsidiaries)
Credit risk is the risk that a counterparty will default on its
contractual obligations resulting in a financial loss to the
Company or the subsidiary that is a party to the contract. Credit
risk arises from cash and cash equivalents and derivative financial
instruments, as well as credit exposures to customers.
The Company and its subsidiaries mitigate their risk of cash and
derivative transactions by only transacting with major
international financial institutions with high credit ratings
assigned by international credit rating agencies. At the investment
level, the credit risk relating to significant counterparties is
reviewed on a regular basis, in conjunction with monitoring the
credit ratings issued by recognised credit rating agencies, and
potential adjustments to the discount rate are considered to
recognise changes to credit risk where applicable. The Directors
believe that the NESF Group is not significantly exposed to the
risk that the customers of its investments do not fulfil their
payment obligations because of the NESF Group's policy to invest in
jurisdictions and with customers with satisfactory credit
ratings.
The Company's maximum exposure to credit risk is the carrying
amounts of the respective financial assets set out below:
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 4,318 11,491 10,809
Trade and other receivables 34,870 34,444 22,211
Debt investments 300,000 300,000 300,000
Total 339,188 345,935 333,020
Debt investments relate to Eurobonds which have been valued at
fair value as part of the Company's investments as disclosed in
note 17. No collateral is received from NESH III or NESH V in
relation to the Eurobonds. The credit quality of these investments
is based on the financial performance of NESH III and NESH V as
well as the underlying investments they own. The risk of default is
deemed low and the principal repayments and interest payments are
expected to be made in accordance with the agreed terms and
conditions.
The Company does not have any significant credit risk exposure
to any single counterparty in relation to trade and other
receivables. In respect of the Company's subsidiaries, ongoing
credit evaluation is performed on the financial condition of
accounts receivable. As 30 September 2021, the probability of
default of the Company's subsidiaries was considered low and so no
allowance has been recognised based on 12-month expected credit
loss as any impairment would be insignificant to the subsidiary (30
September 2020: none; 31 March 2021: none). The Investment Adviser
has sufficient oversight of the subsidiary's receivables to assess
the probability of default.
Details of the Company's cash and cash equivalent balances at
the year end are set out in the table below.
Credit rating
Standard Cash
& Poor's GBP'000
30 September 2021
Long - A/+
Barclays Bank PLC Short - A-1 4,318
30 September 2020
Long - A
Barclays Bank PLC Short - A-1 11,491
31 March 2021
Long - A
Barclays Bank PLC Short - A/A-1 5,809
Long - AA-
Northern Trust Short - A-1+ 5,000
a) Liquidity Risk (Company and subsidiaries)
Liquidity risk is the risk that the NESF Group will not be able
to meet its nancial obligations as they fall due as a result of the
maturity of assets and liabilities not matching. The Board has
established an appropriate liquidity risk management framework for
the management of the NESF Group's short-, medium- and long-term
funding and liquidity management requirements. The Company and its
subsidiaries manage liquidity risk by monitoring forecast and
actual cash ows and matching the maturity pro les of assets and
liabilities and maintaining suf cient cash balances to meet their
operating needs.
The following table shows the maturity of the Company's
non-derivative nancial assets and liabilities. The amounts
disclosed are contractual, undiscounted cash ows and may differ
from the actual cash ows received or paid in the future as a result
of early repayments.
Greater than
Carrying amount Up to 3 months 3 to 12 months 12 months
GBP'000 GBP'000 GBP'000 GBP'000
30 September 2021
Assets
Cash and cash equivalents 4,318 4,318 - -
Trade and other receivables 34,870 34,870 - -
Liabilities
Contractual preference
shares repayment
and dividends payable(1) (200,384) (2,359) - (335,431)
Trade and other payables (22,849) (22,849) - -
Total (184,045) 13,980 - (335,431)
30 September 2020
Assets
Cash and cash equivalents 11,491 11,491 - -
Trade and other receivables 34,444 339 - 34,783
Liabilities
Contractual preference
shares repayment
and dividends payable(1) (200,238) (2,388) - (347,250)
Trade and other payables (23,118) (136) - (22,982)
Total (177,421) 9,306 - (335,449)
31 March 2021
Assets
Cash and cash equivalents 10,809 10,809 - -
Trade and other receivables 22,211 22,211 - -
Liabilities
Contractual preference
shares repayment
and dividends payable(1) (200,308) (2,388) - (342,508)
Trade and other payables (23,953) (23,953) - -
Total (191,241) 6,679 - (342,508)
(1) Assumes no conversion of preference shares in 2036.
23. Preference Shares and Revolving Credit and Debt
Facilities
a) Preference shares
On each of 12 November 2018 and 12 August 2019, the Company
issued 100,000,000 preference shares at a price of 100p per
preference share. The preference shares pay a preferred dividend of
4.75% p.a. until March 2036, after which they have the right to
convert, based on 100p per preference share and the NAV per
ordinary share at the time of conversion, into new ordinary shares
or a new class of unlisted B shares with dividend and capital
rights ranking pari passu with the ordinary shares. The preference
shares do not confer any voting rights, except in limited
circumstances.
The preference shares are redeemable at the option of the
Company at any time after 1 April 2030, in full or in part. The
redemption price will be the subscription price plus any unpaid
dividends. In addition, the preference shares may be redeemed in
full at the option of the holders in the event of a delisting or
change of control of the Company.
Opening Amortisation Carry Amount
GBP'000 GBP'000 GBP'000
30 September 202 1
Preference shares 197,920 69 197,989
30 September 2020
Preference shares 197,781 69 197,850
31 March 2021
Preference shares 197,781 139 197,920
b) Revolving credit and debt facilities
The Company's HoldCos have revolving credit and debt facilities
which are factored into the calculation of the fair value of the
underlying investments.
In January 2017, NESH closed a syndicated loan with MIDIS, NAB
and CBA for GBP157.5m ("Project Apollo") to refinance its revolving
credit facility. As part of the facility agreement, the lenders
provide an additional Debt Service Reserve Facility of GBP7.5m and
hold a charge over the assets of NESH. As at 30 September 2021, the
nominal outstanding amount was GBP149.6m (30 September 2020:
GBP150.5m; 31 March 2021: GBP150.3m).
In July 2015, NESH II agreed a loan with NIBC for GBP22.7m. In
July 2016, GBP1.0m was repaid and in March 2018, the remaining
balance was repaid. At the same time as the repayment the
short-term facility was converted into a new GBP20.0m in revolving
credit facility. As at 30 September 2021, the outstanding amount
was GBPnil (30 September 2020: GBPnil; 31 March 2021: GBPnil).
In March 2016, NESH IV agreed the purchase of Project Radius.
The acquisition was part funded by a debt facility entered between
NESH IV and Macquarie Bank Limited for GBP55.0m, which was fully
drawn down in April 2016. As part of the debt facility agreement
Macquarie Bank Limited holds a charge over the assets of NESH IV.
As at 30 September 2021, the nominal outstanding amount was
GBP47.5m (30 September 2020: GBP49.7m; 31 March 2021:
GBP48.7m).
In July 2018, NESH VI closed a RCF with Santander for GBP40.0m
which was subsequently fully drawn down. In January 2019, the
facility was increased to a total commitment of GBP70.0m with a
subsequent GBP30.0m drawdown. In August 2019, GBP56.0m was repaid.
In February 2021 GBP35.2m was drawn down. As at 30 September 2021,
the outstanding amount was GBP29.1m (30 September 2020: GBP18.5m;
31 March 2021: GBP54.1.m).
In June 2021, NESH III closed a RCF with National Westminster
Bank plc and AIB Group (UK) p.l.c. for GBP75.0m which GBP50m was
subsequently drawn down. As at 30 September 2021, the outstanding
amount was GBP50.0m (30 September 2020: GBPnil; 31 March 2021:
GBPnil).
24. Reconciliation of Financing Activities
Net Income Non-cash
Opening Cash Flows Allocation Flows Carry Amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 30 September
2021
Share capital and
premium 605,938 - - 1,255 607,193
Preference shares 197,920 - - 69 197,989
Retained earnings (25,147) (19,620) 45,467 (1,255) (555)
Six months ended 30 September
2020
Share capital and
premium 602,989 - - 1,642 604,631
Preference shares 197,781 - - 69 197,850
Retained earnings (24,360) (18,709) 23,613 (1,642) (21,091)
31 March 2021
Share capital and
premium 602,989 - - 2,949 605,938
Preference shares 197,781 - - 139 197,920
Retained earnings (24,360) (38,062) 40,224 (2,949) (25,147)
25. Commitments and Guarantees
The Company had parental guarantees in place with two financial
institutions for its subsidiaries' debt obligations and a currency
hedge transaction executed through subsidiaries.
On 19 November 2018, the Company entered into a
counter-indemnity deed with Banco Santander ("Santander") regarding
borrowings by NextPower Radius Limited. Under the terms of the deed
the Company may request Santander to issue a letter of credit for
no more than EUR2,275,150. As at 30 September 2021, no letters of
credit were in issue (30 September 2020: none; 31 March 2021:
none).
On 1 December 2017, the Company provided a guarantee to Intesa
Sanpaolo S.p.A. ("ISP") relating to derivative transactions made
available to NESH V. The guarantee covers all present and future
obligations of NESH V to ISP relating to the derivative
transactions. As at 30 September 2021 the Company has no
outstanding commitments related to this guarantee (30 September
2020: none; 31 March 2021: none).
26. Related Parties
The Investment Manager, the Investment Adviser and the Asset
Manager are considered to be related parties in light of their
responsibilities in implementing the investment strategy set by the
Board of Directors and directing the activities of Group entities.
All management fee transactions with the Investment Manager are
disclosed in note 5.
There are no fee transactions between the Company and the
Investment Adviser.
Under existing arrangements with the Asset Manager, each of the
operating subsidiaries of the Company entered into an asset
management agreement with the Asset Manager and each of the HoldCos
entered into on accounting services agreement with the Asset
Manager. The total value of recurring and one-off services paid to
the Asset Manager by the subsidiaries during the period amounted to
GBPnil (30 September 2020: GBPnil; 31 March 2021: GBP6.2m).
At 30 September 2021, GBP20.2m (30 September 2020: GBP20.6m; 31
March 2021: GBP21.4m) was owed to the subsidiaries in relation to
their restructuring.
At 30 September 2021, GBP32.8m (30 September 2020: GBP34.1m; 31
March 2021: GBP21.4m) was owed from the subsidiaries in relation to
their restructuring, GBP12.6m being cash trapped within the
structure at the period end (30 September 2020: GBP13.5m, 31 March
2021: GBPnil). GBP5.1m of administrative service fees were received
from the subsidiaries during the period (30 September 2020:
GBP4.5m, 31 March 2021: GBP9.1m), none of which was outstanding at
30 September 2021 (2020: GBPnil, 31 March 2021: GBPnil). During the
period, dividends of GBP18.9m (30 September 2020: GBP22.0m, 31
March 2021: GBP38.9m) were received from the subsidiaries.
During the period the Company committed GBP50m to NextPower III
LP. The Investment Manager, the Investment Adviser and the Asset
Manager are all professionally engaged to provide services to this
fund.
The Directors' fees for the six months ended 30 September 2021
amounted to GBP106k (30 September 2020: GBP127k; 31 March 2021:
GBP253k).
27. Controlling Parties
As at 18 November 2021, NextEnergy Capital Group employees held
337,961 shares in NESF.
In the opinion of the Directors, on the basis of shareholdings
disclosed to them, the Company has no immediate nor ultimate
controlling party.
28. Events After the Balance Sheet Date
On 11 November 2021, the Directors approved a dividend of 1.79
pence per ordinary share for the quarter ended 30 September 2021 to
be paid on 31 December 2021 to ordinary shareholders on the
register as at the close of business on 19 November 2021.
Historical Financial and Portfolio Information
Year ended 31 March
Six months
ended 30
2017 2018 2019 2020 2021 2021
Financial
O r di n a r y sh a r e s i 456.4 575. 581.7 584.2 586.9
n i ssu e m 7m m m m 588.2m
110.5 111.0 117.5 101.5 99.6
O r di n ary sh are p ri ce p p p p p 99.8p
Mar k e t capi t ali s a t
io n o f o r di n ary sh are GBP504 GBP639 GBP683 GBP593 GBP585
s m m m m m GBP587m
NA V p er or d in a ry sh a 104.9 105.1 110.9 99.0 98.9
r e (1) p p p p p 103.1p
GBP479 GBP605 GBP645 GBP579 GBP580
To t al or d inary NA V (1) m m m m m GBP607m
P r e mium / ( di s co un t)
t o N A V (1) 5.3 % 5.6 % 6.0 % 2.5 % 0.7 % (3.3%)
Ear n i n g s pe r o r di n 13.81 5.88 12.37 ( 5.09
ary sh are p p p p ) 6.87p 7.75p
Di v ide n ds pe r o r di n 6.31 6.42 6.65 7.05
ary sh are p p p 6.8 7p p 7.16p
D iv id en d yiel d (1) 5.7 % 5.8 % 5.7 % 6.8 % 7.1 % 7.2%
Ca sh d ivi d en d co ver -
p re - s c ri p d ivi d en
d s (1) 1.1 x 1.1 x 1.3 x 1.2 x 1.1 x 1.0x
Pref e ren ce sh a res i n
i ssu e - - 100 m 200 m 200 m 200m
F i n ancial deb t o u t st
andi n g a t su b s idiarie GBP270 GBP270 GBP269 GBP214 GBP246
s l eve l m m m m m GBP283m
GBP749 GBP875 GBP1,014 GBP991 GBP802
G AV m m m m m GBP1087m
F i n ancial deb t ( fin ancial
debt / G A V ) (1) 3 6% 31 % 27 % 22 % 24 % 26%
G earin g (fin anc i al d e
b t + p re f eren c e shares
/ G A V ) (1) 3 6% 31 % 3 6% 42 % 43 % 44%
O r di n a r y sh a r e h o
l de r t o t a l return - c
umul a t i v e s i n ce IP 26.7 33.6 46.7 3 7 . 42 .
O % % % 5 % 6 % 46.4%
O r di n a r y sh a r e h o
l de r t o t a l return - a
nnu a l i s ed s i n ce IP
O 9.1 % 8.5 % 9.5 % 6.3 % 6.1 % 6.2%
O r di n a r y sh a r e h o 21.1 11.8 ( 7 .
l de r t o t a l return % 6.2 % % 8 %) 7 .0% 3.8%
O r di n a r y NA V t o t a 14.4 11.8 ( 4.6%
l r etu r n (1) % 6.3 % % ) 5.1% 7.9%
O r di n a r y NA V t o t a
l return - a nnu a l i s ed 7 . 0
s i n ce IP O (1) 4.9 % % 8.1 % 5.9 % 6.0 % 6.7%
Ong oi ng c h a r g es r a
ti o (1) 1.2 % 1.1 % 1.1 % 1.1 % 1.1 % 1.1%
Weighted average discount rate 7.9% 7.3% 7.0% 6.8% 6.3% 6.3%
Operational
Invested capital (1) GBP522m GBP734m GBP896m GBP950m GBP998m GBP1,029m
Number of assets 41 63 87 90 90 99
Total installed capacity 454MW 569MW 691MW 755MW 814MW 895MW
Annual generation 394 GWh 451 GWh 693 GWh 712 GWh 738 GWh 539 GWh
Generation since IPO 0.6 TWh 1.1 TWh 1.8 TWh 2.5 TWh 3.2 TWh 3.7 TWh
Irradiation (delta vs. budget) (0.3%) (0.9%) +9.0% +4.0% +6.2% +2.4%
Generation (delta vs. budget) +3.3% +0.9% +9.1% +4.7% +5.5% +1.1%
Asset Management Alpha (1) +3.6% +1.8% +0.1% +0.7% +0.7% -1.2%
Weighted average lease life 24.6 23.3 25.2 26.9 27.5 27.8
years years years years years years
(1) Alternative performance measure.
Alternative Performance Measures ("APMs")
We assess our performance using a variety of measures that are
not specifically defined under IFRS and are therefore termed APMs.
The APMs that we use may not be directly comparable with those used
by other companies. Our APMs, which are shown below, are used to
present a clearer picture of how the Company has performed over the
period/year and are all financial measures of historical
performance.
Asset Management Alpha
Asset Management Alpha measures the operating performance of the
portfolio. It is the performance of the portfolio relative to
budget due to active management and excludes the effect of
variation in solar irradiation.
Six months Six months
ended 30 September ended 30 September Year ended
2021 2020 31 March 2021
% % %
Delta of generation vs. budget
(A) 1.1* 11.1 6.2
Delta of irradiation vs.
budget (B) 2.4 10.8 5.5
Asset Management Alpha (A
- B ) -1.2* 0.3 0.7
*the values do not cast due to rounding differences.
Invested Capital
Invested capital measures the capital deployed into solar assets
through the HoldCos and SPVs to generate investment returns for
shareholders.
30 September 30 September
2021 2020 31 March 2021
GBP'000 GBP'000 GBP'000
Invested capital 1,029,098 946,232 998,809
Total Ge aring
Total gearing measures the aggregate of the NESF Group's
financial debt and fair value of the preference shares relative to
GAV.
30 September 30 September
2021 2020 31 March 2021
GBP'000 GBP'000 GBP'000
NESF Group's outstanding
financial debt (A) 282,832 212,636 246,300
Preference shares as per
Statement of Financial Position
(B) 197,989 197,850 197,920
Net assets as per Statement
of Financial Position (C) 606,638 583,540 580,791
Total gearing ((A + B) /
(A + B + C)), expressed as
a percentage) 44.2% 41.3%` 43.3%
Financial Debt Ge aring
Financial debt gearing measures the aggregate of the NESF
Group's financial debt relative to GAV.
30 September 30 September
2021 2020 31 March 2021
GBP'000 GBP'000 GBP'000
NESF Group's outstanding
financial debt (A) 282,832 212,636 246,300
Preference shares as per
Statement of Financial Position
(B) 197,989 197,850 197,920
Net assets as per Statement
of Financial Position (C) 606,638 583,540 580,791
Financial debt gearing ((A)
/ (A + B + C)), expressed
as a percentage) 26.0% 21.4%` 24.0%
Ca sh Income
Cash income measures the cash generated from the Company's
operations.
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Income as per Statement of Comprehensive
Income (A) 29,954 32,577 59,996
Trade and other receivables -
administrative service fee income
accrual at beginning of period/year
as per note 11 to Interim Financial
Statements (B) 759 252 252
Trade and other receivables -
administrative service fee income
accrual at end of period/year
as per note 11 to Interim Financial
Statements (C) 2,041 339 759
Cash income (A + B - C) 28,672 32,490 59,489
Cash Dividend Co v er (Pre-scrip Dividends)
Cash dividend cover (pre-scrip dividends) measures the cash
available to pay ordinary share dividends, treating all scrip
dividends as if they had been paid as cash dividends.
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Cash Income as per the table above
(A) 28,672 32,490 59,489
Total expenses as per Statement
of Comprehensive Income (B) 7,976 8,049 16,351
Pre-scrip ordinary dividends paid
as per Statement of Changes in
Equity (C) 20,875 20,344 41,011
Cash dividend cover (pre-scrip
dividends) ((A - B) / C) 1.0x 1.2x 1.1x
Dividend Yield
Dividend yield is a measure of the return to the ordinary
shareholders.
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Financial debt outstanding at
HoldCos and SPVs level (A) 7.16 7.05 7.05
Ordinary share price at end of
period/year (B) 99.8 102.0 99.6
Dividend yield (A / B, expressed
as a percentage) 7.2% 6.9% 7.1%
N AV pe r Ordinary Share
NAV per ordinary share is a measure of the value of one ordinary
share.
30 September 30 September 31 March
2021 2020 2021
pence pence pence
Net assets as per Statement of
Financial Position (GBP'000) (A) 606,638 583,540 580,791
Number of ordinary shares in issue
at period/year end (B) 588,234,125 585,749,529 586,987,678
NAV per ordinary share ((A /
B) x 1,000) 103.1p 99.6p 98.9p
NAV Total Return per Ordinary Share
NAV total return per ordinary share is a measure of the overall
financial performance of the Company and measures the combined
effect of dividends paid together with the rise or fall in the
NAV.
Six months Six months
ended 30 September ended 30 September Year ended
2021 2020 31 March 2021
pence pence pence
Basic NAV per ordinary share
at period/year end as per
Statement of Financial Position
(A) 103.1 99.6 98.9
Annual dividend per ordinary
share declared in respect
of period/year (B) 3.58 3.48 7.05
Basic NAV per ordinary share
at beginning of period/year
as per Statement of Financial
Position (C) 98.9 99.0 99.0
NAV total return per ordinary
share ((A + B - C) / C, expressed
as a percentage) 7.9% 4.1% 7.0%
Ordinary Shareholder T o t al R e turn
Ordinary shareholder total return is a measure of the overall
performance of the ordinary shares and measures the combined effect
of dividends paid together with the rise or fall in the share
price.
30 September 30 September
2021 2020 31 March 2021
pence pence pence
Ordinary share price at period/year
end (A) 99.8 102.0 99.6
Annual dividend per ordinary
share declared/paid in respect
of period/year (B) 3.58 3.48 7.05
Ordinary share price at beginning
of period/year (C) 99.6 101.5 101.5
Ordinary shareholder total
return per share ((A + B
- C) / C, expressed as a
percentage) 3.8% 3.9% 5.1%
Premium/discount to NAV per Ordinary Share
Premium to NAV per ordinary share is a measure of the
performance of the ordinary share price relative to the NAV per
ordinary share.
30 September 30 September
2021 2020 31 March 2021
pence pence pence
Ordinary share price at period/year
end (A) 99.8 102.0 99.6
NAV per ordinary share at
year end as per Statement
of Financial Position (B) 103.1 99.6 98.9
Premium/discount to NAV
per Ordinary Share ((A -
B) / B, expressed as a percentage) -3.3% 2.4% 0.7%
Ongoing Charges Ratio
Ongoing charges ratio measures the Company's annualised
recurring operating costs (excluding costs incurred by the HoldCos
and SPVs, interest costs, preference share dividends and taxation)
as a percentage of the average of the net assets at the end of each
of the last four consecutive quarters ending at the year end.
30 September 30 September
2021 2020 31 March 2021
GBP'000 GBP'000 GBP'000
Total expenses as per Statement
of Comprehensive Income (A) 15,954 16,098 16,351
Preference share dividends
as per Statement of Comprehensive
Income (B) 9,436 9,500 9,526
Non- recurring expenses (C) 316 406 253
Average of quarterly net
assets (D) 593,467 579,523 582,823
Ongoing charges ratio ((A
- B - C) / D, expressed as
a percentage) 1.1% 1.1% 1.1%
General Shareholder Information
Alternative Investment Fund Management Directive ("AIFMD")
The AIFMD aims to harmonise the regulation of Alternative
Investment Fund Managers ("AIFMs") and imposes obligations on
managers who manage or market Alternative Investment Funds ("AIFs")
in the EU or who market shares in such funds to EU investors.
The Company is a non-EU AIF and has appointed NextEnergy Capital
IM Limited as its non-EU AIFM. The Company's marketing activities
in the UK and the EU are subject to regulation under the AIFMD and
any applicable national private placement regimes ("NPPRs"). NPPRs
provide a mechanism to market non- EU AIFs that are not allowed to
be marketed under the AIFMD domestic marketing regimes. The Board
uses NPPRs to market the Company, specifically in the UK, the
Republic of Ireland, the Netherlands and Sweden.
In accordance with the AIFMD, information in relation to the
Company's leverage and remuneration of the Investment Manager, as
the Company's AIFM, are required to be made available to investors.
These disclosures, including those on the AIFM's remuneration
policy, are available on request from the Investment Manager.
Packaged Retail and Insurance-Based Investment Products
("PRIIPs") Regulation/Key Information Document ("KID")
The PRIIPs Regulation aims to ensure retail investors are
provided with transparent and consistent information across
different types of financial products.
The Company is a PRIIP. The PRIIPs Regulation requires the
Investment Manager to publish a KID in respect of the Company that
includes standardised illustrations of theoretical risk and
returns. The KID is available on the Company's website under
Investor Relations (nextenergysolarfund.com).
The Company is not responsible for the information contained in
the KID and investors should note that the procedures for
calculating the risks, costs and potential returns are prescribed
by law. The figures in the KID may not reflect the expected returns
for the Company and anticipated performance returns cannot be
guaranteed.
Foreign Account Tax Compliance Act ("FATCA")/ OECD Common
Reporting Standard ("CRS")
FATCA is a United States federal law enacted in 2010, the intent
of which is to enforce the requirement for United States persons
(including those living outside the US) to file yearly reports on
their non-US financial accounts. Developed and approved by the OECD
in 2014, the CRS is a global standard for the automatic exchange of
financial account information between governments around the world
to help fight against tax evasion and protect the integrity of
systems.
The Board, in conjunction with the Company's service providers
and advisers, will ensure the Company's
compliance with the FATCA and CRS requirements to the extent relevant to the Company.
Markets in Financial Instruments Directive II ("MiFID II")
Status
MiFID II requires retail investors in complex products to be
assessed for "knowledge and understanding" by distributing firms if
they are buying them without advice.
The Company's ordinary shares are considered as "non-complex" in
accordance with MiFID II.
Retail Distribution of the Company's Shares Via Financial
Advisers and Other Third-Party Promoters
The FCA's rules restrict the promotion of investment products
classified as "non-mainstream pooled investment products" to retail
investors. The restrictions do not apply to ordinary shares in a UK
investment trust or non-UK investment company which would qualify
for approval as an investment trust under section 1158 of the
Corporation Tax Act 2010 if resident and listed in the UK.
The Board has been advised that the Company would qualify as an
investment trust if it was resident in the UK. Accordingly, the
promotion and distribution of the Company's ordinary shares are not
subject to the FCA's restrictions referred to above.
The Company currently conducts its affairs so that its ordinary
shares can be recommended by financial advisers to retail investors
and intends to continue to do so for the foreseeable future.
ISA Status
NESF's ordinary shares are eligible for stocks and shares
ISAs.
The Company intends to continue to manage its affairs so that
its ordinary shares qualify as an eligible investment for a stocks
and shares ISA.
Net Asset Value per Ordinary Share
The NAV per ordinary share is calculated on a quarterly basis
and published through a stock exchange announcement.
Scrip Dividends
The Company offers a scrip dividend alternative to shareholders.
For further information, please see the scrip dividend alternative
circular for the year ending 31 March 2022, which is available
under "Publications" in the Investor Relations section of the
Company's website (nextenergysolarfund.com).
Additional Information
Copies of the Company's Annual and Interim Reports, quarterly
fact sheets and stock exchange announcements, together with
information on the Company's ordinary share price, NAV per ordinary
share, historic ordinary share and NAV performance, together with
further information, is available on the Company's website
(nextenergysolarfund.com).
Financial Calendar for Year Ending 31 March 2022
Annual results announced June 2022
Annual General Meeting August 2022
Interim dividends
In the absence of unforeseen circumstances, the Directors expect
to declare and pay the following interim dividends per ordinary
share in respect of the financial year ending 31 March 2022.
Dividend Announcement Ex-dividend Payment date Amount
date date
11 November 19 November 31 December
2nd 21 21 21 1.79p
18 February 19 February
3rd 22 22 31 March 22 1.79p
4th 20 May 22 21 May 22 30 June 22 1.79p
Cautionary Statement
This Annual Report and the Company's website may contain certain
"forward-looking statements" with respect to the Company's
financial condition, results of its operations and business, and
certain plans, strategies, objectives, goals and expectations with
respect to these items and the markets in which the Company
invests. Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
"aims", "anticipates", "believes", "estimates", "expects",
"intends", "targets", "objective", "could", "may", "should", "will"
or "would" or, in each case, their negative or other variations or
comparable terminology.
Forward-looking statements are not guarantees of future
performance. By their very nature forward-looking statements are
inherently unpredictable, speculative and involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future. Many of these
assumptions, risks and uncertainties relate to factors that are
beyond the Company's ability to control or estimate precisely.
There are a number of such factors that could cause the Company's
actual investment performance, results of operations, financial
condition, liquidity, dividend policy and financing strategy to
differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not
limited to: changes in the economies and markets in which the
Company operates; changes in the legal, regulatory and competition
frameworks in which the Company operates; changes in the markets
from which the Company raises finance; the impact of legal or other
proceedings against or which affect the Company; changes in
accounting practices and interpretation of accounting standards
under IFRS; and changes in power prices and interest and exchange
rates.
Any forward-looking statements made in this Annual Report or the
Company's website, or made subsequently, which are attributable to
the Company, or persons acting on its behalf (including the
Investment Manager and Investment Adviser), are expressly qualified
in their entirety by the factors referred to above. Each
forward-looking statement speaks only as of the date it is made.
Except as required by its legal or statutory obligations, the
Company does not intend to update any forward-looking
statements.
Nothing in this Annual Report or the Company's website should be
construed as a profit forecast or an invitation to deal in the
securities of the Company.
Glossary and Definitions
Administrator Apex Funds and Corporate Services (Guernsey)
Limited
AGM Annual General Meeting
AIC The Association of Investment Companies
AIC Code The AIC Code of Corporate Governance (February
2019)
AIFM Alternative Investment Fund Manager for the
purpose of the EU's Alternative Investment
Fund Management Directive
Asset Management The difference between (i) the delta of generation
Alpha vs. budget and (ii) the delta of irradiation
vs. budget
Apollo portfolio 21 UK solar plants held within NESH (see the
Operating Portfolio
Asset Manager WiseEnergy (Great Britain) Limited and WiseEnergy
or Italia Srl
WiseEnergy
Brexit The withdrawal of the United Kingdom from the
European Union
Cash dividend cover The ratio of the Company's cash income to dividends
paid or payable in respect of the financial
period/year
CBA Commonwealth Bank of Australia
Company or NESF NextEnergy Solar Fund Limited
Consultants The two independent market forecasters used
by the Company
CO(2) e or A term for describing different greenhouse
carbon dioxide gases in a common unit. For any quantity and
equivalent type of greenhouse gas, CO(2) e signifies the
amount of CO(2) which would have the equivalent
global warming impact
DNO Distribution Network Operators
DNOO Distribution Network Operator Outages
EBITDA Earnings before interest, tax, depreciation
and amortisation
Embedded benefits Supplier costs that are reduced or avoided
via contracting with small-scale generation
connected at the distribution network level
instead of the national transmission system
EPC Engineering, Procurement and Construction
ESG Environmental, Social and Governance
FCA Financial Conduct Authority
FiT Feed-in-Tariff schemes are financial mechanisms
by which the UK Government incentivised the
deployment of small-scale renewable energy
generation and the Italian Government incentivised
the deployment of large-scale renewable energy
generation) by requiring participating licensed
electricity suppliers to make payments on both
generation and export from eligible installations
GAV Gross asset value, being the aggregate of the
net asset value of the ordinary shares, the
fair value of the preference shares and the
amount of NESF Group debt outstanding
GW A un i t of power equal to 1,000 MW
GWh GW hour, being a measure of electricity generated
per hour
H o l dC os Intermediate h oldi n g companies used by the
Co m pa n y as pass-through vehicles to i nvest
i n underlying solar energy infrastructure
assets, currently being N ES H, N ES H II ,
N ES H III, N ES H I V , N ES H V and N ES
H VI
IFRS International F inancial Reporting Standards
Inv e st men t NextEnergy Capital L i m it e d
A d viser or
N EC
Investment Manager NextEnergy Capital IM L i m it e d
IPO Initial Public Offering
IRR Internal Rate of Return
KPMG KPMG Channel Islands Limited, independent auditor
to the Company
KWh Kilowatt hour, being a measure of electricity
generated per hour
LIBOR London Interbank Offered R a te
MIDIS Macquarie Infrastructure Debt Investment Solutions
MW A Megawatt i s un i t of power equal to one
m illio n watts and i s used as a measure of
the output of a power plant
MW h MW hour, being a measure of electricity generated
per hour
N AB National A ust ralia Bank
N e t a ss e ts Net asset value
or N AV
N AV total return The actual rate of return from divid en d s
paid and a n y increase or reduction i n the
NAV per ordinary sh ar e o ve r a gi ven period
of t i me
N EC or NE C G The NextEnergy Capi t al gro u p of c o m pa
roup n i es , i nc l u di n g the Investment Manager,
Investment Adviser and Asset Manager
NESF G r oup The Co m pa n y, HoldCos and SPVs
N ES H NextEnergy Solar Holding L i m i te d
N ES H II NextEnergy Solar Holding II L i m i te d
N E SH III NextEnergy Solar Holding III L i m i te d
N E SH IV NextEnergy Solar Holding IV L i m i te d
NESH V NextEnergy Solar Holding V L i m i te d
N ES H V I NextEnergy Solar Holding VI L i m i te d
NIRO C L i ke the R OC s i n Great B ri t ai n , the
Northern Ireland Rene wabl e Obligation Certificate
scheme obliges electricity su ppli e r s to
produce a certain number of NIROCs for each
MW h of electricity w h i ch they supply to
their customers i n Northern Ireland or to
pay a b uy - o ut fee that i s proportionate
to a n y shortfall i n the number of NIROCs
being so presented
NP III NextPower III L.P.
NZ NextZest
O&M Operations and Maintenance
O EC D Orga n i sat ion for Ec o nom i c Co-operation
and Development
OFGEM Office of Gas and Electricity Markets
Ongoing c har The r e g u lar, r ecu rri n g a nnu al costs
g es ratio of r unn i n g the Co m pa n y (e x c l u di
n g the costs of a c q u i s i t io n or di
s po s al of i nvestments , fi n a nc i n g
charges and gai ns or losses ari s i n g on
i nvestments) , expressed as a percentage of
average net assets, calculated i n accordance
with the AIC' s methodology
O r d in a ry The actual rate of return from divid en d s
sh a r eho l d paid and a n y increase or reduction i n the
er total return ordinary sh ar e price o ve r a gi ven period
of t i me
O r d inary shar The issued ordinary sh ar e capital of the
e s Co m pa n y
P e rf o r mance Describes the r e la t io nsh ip between the
r a ti o actual and theoretical energy outputs of a
solar plant (expressed as a percentage)
PPA P ow e r purchase agreement
Pr emium/discount The a m o unt , expressed as a percentage,
to N AV by w h i ch the Co m pa n y' s ordinary sh
ar es trade abo ve or below the NAV per ordinary
sh ar e
Preferen ce sh The issued preference sh ar e capital of the
a res Co m pa n y
PV Ph o t o v ol t ai c
Ra d ius po rtf F i ve UK solar plants held wi th i n N ES
o li o H IV (see the Operating Portfolio
RCF Revolving Credit Facility
RO C Rene wabl e Obligation Certificates (the Rene
wabl e Obligation scheme i s the fi n a nc
ial mechanism by w h i ch the UK Government
incentivised the deployment of large-scale
r ene wabl e electricity generation by placing
a mandatory r e q u ir ement on licensed UK
electricity su ppli e r s to source a specified
and annually i nc r e a s i n g proportion
of the electricity they supply to customers
from e ligibl e r ene wabl e sources or pay
a penalty)
RO C r ecyc l The payment received by generators from the
e r e di st rib ut io n of the b uy - o ut fund
(payments ar e made i nt o the b uy - o ut
fund when su ppli e r s do not have sufficient
R OC s or NIROCs to c o ver their obliga t
io n)
RPI R e t ail Pr ice I ndex
RR AM portf o 10 UK solar plants held i n N ES H III (see
li o the Operating Portfolio
S c rip sh a r Ordinary sh ar es issued p u r su a nt to the
e s Co m pa n y' s sc rip divid en d alternative
SD G The Sust ai n abl e Development Goals ar e
a set of a m bi t io us global developmental
targets adopted by the United Nations Member
States i n 2015 to be a ch i eve d by 2030
and seek to address the global challenges w
e face through the pro m o t io n of development
as a balance of s o c ial, ec o n o m i c ,
and en viro nment al sust ai n abili t y
S o lis po rtf E ig ht Italian solar plants held wi th i n
o li o N ES H V (see the Operating Portfolio
SP Vs Special purpose vehicles that hold the Co m
pa n y' s i nvestment portfolio of underlying
solar energy infrastructure assets
Thirt ee n Kin 13 plants held i n N ES H III (see the Operating
g s po rtf o li Portfolio
o
Tre a sury sh Ordinary sh ar es w h i ch ar e bought back
a res by the Co m pa n y, r e d uc i n g the number
of outstanding sh ar es on the open m ar ket
, and held by the Co m pa n y for resale at
a future da te
Wh ole s ale r Revenue from energy sold i n the wholesale
eve nu e power m ar ket w h i ch i s not connected with
subs idy schemes or PPAs
Corporate Information
The Company
NextEnergy Solar Fund Limited
Registered Office:
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey GY1 2HL
Registered no.: 57739
LEI: 213800ZPHCBDDSQH5447
Ordinary Share ISIN: GG00BJ0JVY01
Ordinary Share SEDOL: BJ0JVY0
London Stock Exchange Ticker: NESF
Website: www.nextenergysolarfund.com
Directors
Kevin Lyon, Chairman
Vic Holmes, Senior Independent Director
Patrick Firth
Joanne Peacegood
(All non-executive and independent)
Investment Manager
NextEnergy Capital IM Limited
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey GY1 2HL
Investment Adviser
NextEnergy Capital Limited
20 Savile Row
London W1S 3PR
Company Secretary and Administrator
Apex Funds and Corporate Services (Guernsey) Limited
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey GY1 2HL
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey GY1 1WR
Registrar
Link Market Services (Guernsey) Ltd
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Legal Advisers
As to UK Law
Stephenson Harwood LLP
1 Finsbury Square
London EC2M 7SH
As to Guernsey Law
Carey Olsen (Guernsey) LLP
PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ
Mourant Ozannes
Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey GY1 4HP
Sponsor and Joint Broker
Shore Capital and Corporate Ltd
Cassini House
57 St James's Street
London SW1A 1LD
Joint Broker
Cenkos Securities plc
6, 7, 8 Tokenhouse Yard
London EC2R 7AS
Joint Broker
RBC Capital Markets Ltd (appointed 8 November 2021)
100 Bishopsgate
London EC2N 4AA
Media and Public Relations Adviser
Camarco
107 Cheapside
London EC2V 6DN
Principal Bankers
Barclays Bank plc
6/8 High Street
St Peter Port
Guernsey GY1 3BE
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